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I think what you may be missing is that AWS offers a lot more than EC2. In fact EC2 may well be the least significant offering they have.

- Using other AWS services significantly decreases number of subject one has to figure out how to operate. Use simpledb/dynamo/rdb as the data store, route 53 for DNS, SQS as the queue service, ELB as the load balancer, SES for emails, etc. In addition, there are services provided by 3rd party services that one can use New Relic, App First for monitoring, MailChimp for email newsletters, etc.

It's not that you cant' do these things yourself, but installing, configuring and maintaining each of these solutions takes time, and most startups don't have the bandwidth and/or the expertise in all these. Letting AWS handle at least some of these makes it possible to do the rest of the tasks properly.

- Pay as you go structure makes it easy to create testing and staging environments that are almost same as production with minimal additional cost.

- I find that we don't spend much time troubleshooting OS related issues in production anymore. If there is a prb with one of the instances (and not the others), it often gets killed, and another one gets started within minutes.

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