First, diaries are probably an okay place for fiction without needing to start putting fiction through the queue. If you want to queue 'em, perhaps a MLP to "fiction I wrote" is the way to do it, especially if your skin is thick.
Second, any fiction longer than 3 pages I just can't read on a monitor, and I think most people are in a similar boat. Anything long and literary I generally download to my Palm which is easier on my eyes and allows reclining in an easy chair, but I probably wouldn't bother for amateur fiction off a website.
Finally, the majority of fiction on the Intarweb just sucks. I have read historical fiction that has enraged me, science fiction that has made me cry, and "erotica" that's made me want to kill myself. This Intarweb is covered with awkward, stilted dialog, cliche-laden paragraphs, contrived plot devices, uninteresting stories, characters with the depth of a paper doll, and poor styles ranging from weak echos of other writers' voices to haphazard jumbles of words that barely convince that the writer has a firm grasp of English. And that's the better stuff, the rest is thinly-veiled fan fiction or blatant ripoffs of other peoples' work. How in the world somebody can use characters like "Princess Leia" in "their" work and pass it off as "original" is completely and totally beyond me.
Hell, most published fiction, including bestsellers, generally doesn't flip my switches. Look at the "hardcover fiction" here (as of this date :) ), would you really want to sit and read any of these on your computer monitor? Most new fiction I've read has left me totally unsatisfied, I can't even finish most of what I pick up, and even the newer stuff I tend to like (like Tom Clancy's stuff) leaves me cringing throughout. Especially Mr. Clancy, several novels later and his dialog is still forced, his characters are either rehashes of his few base characters or flat stereotypes, and he uses the same devices in his stories. On the other hand, he's an easy read, the stories tend to be interesting, and you can sort of put your brain into neutral, you're not going to miss a trick. Same goes for Stephen King.
If there's a "fiction" section on k5, I fear it will turn into a writers' workshop sort of thing, and based on my observations of the amateur writers-helping-writers thing it just turns into a mutual admiration society of people who can't write stroking other people who can't write, and encourages goofy excercises like "write a story that happens in parallel with something else you've written" or "write two stories so the events of each effect each other." It's a waste of time, and lets people share an illusion of not being bad writers. If you have a story to tell, and it's of novel length, and you have a decent grasp of English, you can write it without the help of an amateur society, and silly exercises won't help.
Nick McDonell just sat down and wrote "Twelve." If you have a novel in you and you desire to make your daily bread as a "writer," just write it, and don't goof around posting it to weblogs or getting stroked by other unpublished writers, try to get an agent, send sample chapters to publishers, in short, sell it. If you're just goofing around, put it in your diary, post it to usenet, or whatever.
"You can get a lot more done with a kind word and a gun, than with a kind word alone." -- Al Capone