EC2 micro instances are great. They are super cheap ($0.02 per hour) but they don't support ephemeral (local) storage; you must use Elastic Block Store (EBS).
When using Ubuntu 10.04 ami-1634de7f I found my instance was not coming back after a reboot. I had a tough time finding the answer on Google but the issue was https://bugs.launchpad.net/ubuntu/+source/cloud-init/+bug/634102. It's been fixed in Maverick but still persists in Lucid.
My solution was to edit /etc/fstab and add the
proc /proc proc nodev,noexec,nosuid 0 0 /dev/sda1 / ext3 defaults 0 0 /dev/sdb /mnt auto defaults,nobootwait,comment=cloudconfig 0 0
It's my understanding that if you later have some ephemeral storage available it'll mount. But
nobootwait lets us boot on instances without it.
I got rid of my Slicehost VPS recently. I'm on Amazon EC2 to have an occasional machine for work. I've found it's very useful to have a machine that isn't on the Facebook corp network when debugging. EC2 is great because I can just keep the instance off when not in use. Then the only charge is for the EBS at $0.10 per GB per month - just $1.50 for me.