This is somewhat similar to PrecociousApprentice's Setting Creation post. But is slightly different too more dealing with the actual process and less the end-effect.
I would definitely call myself a story-based DM. There is a main-plot, side-plots, character-plots, etc. As such I like to keep my setting loose to allow the plot and where the PCs take it to have "room" to deliver the narrative that is appropriate.
As such I don't create wholesale, mapped out settings I do; Drag and Drop, essentially:
Drag and Drop: The DM after consultation with his Players on what the campaign should be like; the themes, atmosphere, style of gameplay, races, etc, etc. The DM develops the plot, he does so separate of any "world" elements besides what had been already decided in consultation (exception of this being if one element is say a focus on a particular city for instance, though this would have been brought up).
After this comes a brainstorming stage. Where essentially the DM comes up with a whole library of places, events, people, etc. These would fit with the themes, atmosphere, as pre-determined. However none of this actually exists "in-game". They are simply drag and drop elements determined not by the world but the plot and the players. The plot dictates that a mine should be there, a mine is there. The players state they wish to visit a wise-man in the desert from their past, this wise-man is now in this newly formed desert.
Essentially, while there is prep-work that goes into it and in a way is "world-building", it is really the plotline and what the players choose to go/exist in the world that actually builds the world. Without the progression of the plot and players none of the world would be defined.
This idea probably has been brought up before. But I figured it is another model to through out there into the debate.