A story about stories:[1]
The Alter Rebbe himself, was dedicated to the education of his son, Reb Moshe and his grandson, the future 3rd Lubavitcher Rebbe, Rabbi Menachem Mendel, during their formative years.
One of the specific manners of education was that after their learning in school, they were to hear Chassidic stories.
Telling our children chassidic stories affects their imagination and has a lasting impact on their whole lives.
[1] Sefer HaSichot, 5700 Pg. 158