It's hard to narrow short stories down to one favorite that I've read. The first two that came to mind are "Documentaries" by Izzy, which Mare mentioned, and "Crash and Burn" by Refuse - both oldies. "Beautiful Girl" by Mare is another old one that's always stuck with me. I also love the funny challenge ones people have written, like "Nick's Dirty Kicks" by Steph and Julilly's Gaston story for the Beauty and the Beast challenge (don't remember the exact title).
My favorite short story that I've written is one of those funny challenge stories, "Shorty and the Deceased."