What is a story in which character development is more important than the plot called?
It is a bildungsroman. See explanation.
The novel which shows character's development or education is called a bildungsroman.
The term comes from German words die Bildung = education, formation and der Roman = novel.
"A Bildungsroman relates the growing up or "coming of age" of a sensitive person who goes in search of answers to life's questions with the expectation that these will result from gaining experience of the world."
The description comes from Wikipedia article