The topic of the cost of an instance on EC2 vs a dedicated vps came up
last night. In an amazing coincidence Amazon has announced "reserved
instances" where you commit to an up front fee for 1 or 3 years. In
return you get a big discount on the cost of running the instance. For
1 year it works out to be about $50 a month, if you commit to 3 years
you get the instance for $35 a month. I think this makes it much more
cost competitive. The other aspect of this is the instance is
guaranteed to be there when you need it, handy for DR.

http://aws.typepad.com/aws/2009/03/announcing-ec2-reserved-instances....

cheers,
  mick