I just followed a banner ad from our site to this new Web 2.0 style "user created content" site named Sploder . Sploder is a site that allows users to create their own "games" and share them with people, embed them on other sites, etc. It's a really cool application that has arrived at just the right time.
The types of games that can be created (right now) are limited mostly to top-down 2D physics based shooters, but the possbilities of a system like this are limitless. I like that the creators of the application did not try to "bite off more than they could chew" with this first implementation. They have wisely limited the scope of the games that could be created, and focused on making an game design engine that fairly easy to use. The types of gamesthat can be created with Sploder is fairly limited, but if this is successful, I would expect to see tons of imitators that will push Sploder itself to add more and more features and games engines to their offering.
You can design and test your games right in the web interface. Almost all features are completed using drag&drop or click&drag functionality. Sploder have created a really nice interface for making these types of games, and they have proven that "user created content" in Web 2.0 does not have to be limited to embarrassing photos of your grand parents, or videos of kids getting beat-up by cops.