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Short stories, as well as other works of literature, are available for download at Project Gutenberg DE. Check the Project's English pages to see whether English translations of them are also available. When in a library, just ask the librarian.
I am not sure if it's a short story or not but the novel Momo by Michael Ende is a popular recommendation for German readers.
I have created an iOS app that helps you learn more than 1000 German nouns for free. We all know how hard it is to learn der, die, das, so I have created an app that makes you learn by playing. Learning German nouns has never been so easy. Try it by yourself, for free.
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