I always thought The Suffering handled the morality system in a nice way.
Your character is a death row inmate who's been accused of killing his wife and two kids, though no one really knows for sure, and the main character himself apparently 'blacked out' the whole thing. How you approach the rest of the game dictates what actually happened in your character's past.
Taking good options, like saving/helping out fellow inmates/guards, will lead to you finding out that your character was innocent of the crimes that he was imprisoned for.
Neutral options, i.e. neither hindering nor helping out others or having your escorts get killed by monsters, would lead to you finding out that your character accidentally killed his wife, which would then cause his eldest son to kill his little brother and then himself.
Evil options, like killing everyone you meet and generally being sadistic (you can gas a helpless guard who's trapped in a gas chamber, for example) would lead to you finding out that your character did indeed kill his own wife and kids.
Moreover, the ghosts of your character's dead family will treat him differently depending on his alignment, generally being more positive and supportive if you're good, and being more vindictive and spiteful if you're evil.
Your character's appearance would also change depending on alignment. Being good would give him a clean, healthy appearance; at neutral, his clothes would look slightly shabby and dirty; at evil, he'd have an unhealthy pallor, skin lesions on most of his body, and his clothes are more heavily stained.
There was never anything really overt in the game when it came to making decisions, which was nice. If you saw someone asking for help, you could acquiesce, you could ignore him, or you could just shoot him.