[greatzebu]

If you have a lot of heavily-read data distributed across machines, you're probably constrained by available spindles rather than available storage space. So co-locating data that will almost never be read with heavily-read data is effectively free. I would guess that Amazon stores Glacier data alongside S3 data, and the lower price reflects the fact that the limiting factor in their storage system is IO rather than capacity.

[duskwuff]

That doesn't offer any clear explanation of why they would charge extra for early deletion of that data, though.

[greatzebu]

One possible explanation: the cost of initial IO to write your data is amortized over that data's lifetime. The early-delete penalty ensures that Amazon always makes enough on your data to justify the cost of writing it into their system in the first place.