I found Dawn of Worlds on the web and got the PDF of it. My group tried and loved it. I was wondering has anyone else worked with this very novel system for cooperative world building?
Take a look at Microscope. It just finished its playtest cycle and should be out soonish. The game is all about starting at the macro level and slowly zooming in on details of particular portions of the world.
It's likely inspired by ARIA: Canticle of the Monomyth, way out of print. The Worlds book specifically addresses shared creation of the setting. Your best bet in finding one is eBay.
An answer to the question in the title would be Universalis from Ramshead Publishing. Part of play in Universalis involves taking turns making assertions about the game world and campaign to follow, and there's a "stakes" mechanism involved in enforcing those desires.
Another system that would deliver this is Shock: Social Science Fiction (and presumably Human Contact to a degree).