Let me explain myself. Firstly many great novels have been built upon the bones of short stories, “Tales from 1001 nights”, “Hyperion” by Dan Simmons, “Foundation” (and the subsequent volumes)Isacc Asimov. There are so many others that I would bore you trotting them out.
Secondly there is the short story that grew into a novel, again innumerable and many remain among the most successful novels of all time(many written by American’s). Hunter.S. Thomson, Aldous Huxley, Joseph Heller and so many more my fingers would cramp from the typing of them before I reached the end.
Thirdly the tale within a tale is essentialy a short story or a number of short stories, contained within a novel. Tom Wolfe, Philip Roth, Sam Clemmens, John Steinbeck, Stephen King etc use that method regularly.
The short story is as important to the novel as the novel is to the short tale. I think, that the disciplines of short story writing and producing a novel are intimately interlinked, dizygotic twins, seperate whilst rmaining the same.
Anyone who has read my books will know the importance I place upon the short story. I like this "puchy" small form tale as much as enjoy a grandiose epic. After all every novel is comprised of a huge amount of short tales.
I believe that with the net and the accessability of information the importance of the short tale will become even more important as attention spans diminish.