How I Use It
I think the app Magisto would be a really nice tool to create short movies/videos. You can pull in pictures to create a digital story. It creates the video fairly fast with little teaching needed. You do need an account to create movies/videos which will limit your audience in terms of students (my recommendation would be secondary students). You can add a theme which can be creative but sometimes mixes up the content which then doesn't let the user tell the story they want. You can also add music in the background (many preloaded for free) and you can also add your own which then could lead to a violation of copyright.
As a teaching tool, I'm not sure it's all that great. I didn't rate it too high. I do like the product because it's fast and easy! I would use it take a short video of a science experiment or perhaps a video creation of pictures from a field trip we took! Parents would probably love it and you can share it via your classroom Twitter, Facebook, Google+ account. I think in this way, you could really improve parent/teacher communication and show those parents who aren't in your classroom every day all the fun things you do!
For students to use it, I think it would be better if you could share it to YouTube. I think this is a downfall in my opinion. I think you'd have to take some time going through all the themes to find which one might work for the project. I could see some positives if students could use this for Project Based Learning and used Magisto to show their learning. I just don't see it as much of a teaching tool however.