[aristus]

You are paying a premium for scaling, bandwidth, operations and lower capital cost.

Being able to smoothly scale from 1TB to 2TB (or down to 500GB) is nothing to sneeze at. Nor is having a metered 250mbps connection (shop around -- hard to get less than $30/mbps at low volume), or having someone else handle the pager 24x7x365, or paying $150 at the end of the month instead of $5,000 up front.

There are systems and scales for which S3 is actually too expensive, and of course Amazon is making a profit off of all of this.

But there are a lot of hidden costs to DIY. Ask anyone who's tried to get 6 more servers flown in on the weekend, or had to cut short a holiday to drive to the damned colo at 3am, or overbought capacity, etc.

(edit) As for the "unlimited" option -- SM et al know to the byte what their average user uses so they price the unlimited option to make a profit on the average case.