[mchadwick]

We've been running hundreds of instances on EC2 for a couple years, and have never seen one just "go down." However, we will get notifications of "degraded instances." When an instance is degraded, you have some window (generally a couple days) to move the services running on that instance to another one. Even at the aforementioned scale, this happens maybe once every three to four months.

Can you use this as a VPS replacement? Probably. My guess is that your uptime will be no worse than some VPS provider. However, if you're storing information on the ephemeral storage, the onus is on you to get it to the new instance. I imagine that isn't generally the case on a VPS.

You may be able to mitigate this by using EBS (required in the case of these micro instances), but I've only used EBS a handful of times, and am no expert on the subject. If I understand their layout for these micro instances, it would simply be a matter of spinning up a new instance and spinning down the degraded node.