I believe an interactive narrative can be written in first, second, or third person, as long as you play to the strengths of each voice.
Second person is hard to write well, and is often associated with the cheesy Choose-Your-Own-Adventures of the '80s. On the other hand, English speakers frequently revert to it for directions (“You go down to Ed’s Hardware, then you take a right”) and for anecdotes (“So, you’re holding the cat in one hand, a cucumber in the other, and your mom walks in on you, what do you do?”). And with the right author, second person can be almost invisible.
As mentioned above, you shouldn’t tell the player “You are very afraid,” but you can often get away with showing them: “Time freezes as the creature advances. Your heart hammers, snatching your breath away. Your feet feel rooted to the spot.” Second person characters usually end up pretty generic (and uninteresting), since the writer doesn’t want to contradict the reader’s real appearance, mindset, or reactions.
I strongly dislike the “intrusive author” format that breaks the fourth wall and asks the reader what they want to do, then comments on their choice each time. That “Gentle Reader” business died in fiction almost 100 years ago, and should stay dead. Just state the situation, provide the choices, and show the results:
Obviously, she’s going to need more convincing.
* Offer to wash her car for a year.
* Threaten to uninvite her to your birthday party.
* Blackmail her with the cat and cucumber incident.
Her eyes widen for an instant. She glares. “You wouldn’t dare!”
First person allows you to write a character that is different from the reader, but still very intimate, allowing the reader inside their head, and influencing their decisions as a conscience might:
I think I’m losing ground here. I’d better convince her, and quick.
* I could wash her car for a year. And that would give me an excuse to come to her house every week!
* I could threaten to uninvite her to my party. But what if she calls my bluff?
* I could blackmail her with the cat/cucumber incident. But that could jeopardize my chances with her permanently.
The look on her face tells me everything. “You wouldn’t dare!” she hisses. But I know I’ve won, at least for now.
Third person might work well for genres like action, or characters distanced from the reader. It would also allow you to switch characters and locations, and offer omniscient knowledge (“Little did he know, he’d be dead from stomach cancer in a month.”)
Dirk McBain spat the smoking stub from his sneering lips. It sizzled out on the puddled floor of the abandoned warehouse. “I guess you gonna need some convincin’,” he growled.
* He pressed the .45 to the man’s temple, thumbing back the hammer.
* He slowly rapped the .45 against the man’s kneecap. Tap. Tap. Tap.
* He leveled the revolver at the cat, mewling pitifully in its cage.
The man’s voice quavered, almost a wail. “You wouldn’t dare!” he plead. McBain sighed. Too bad the boss wants him alive, he thought. Gonna be a long night.