We are moving in that direction as well. Actually we do not plan on buying any more application servers and will scale on demand with ec2. Would not trust my any real hard data to live there but it does seem perfect for application and even webservers. Probably another month or 2 away before we really start on the dev work though.

This project whch I am sure you have seen will make monitoring and such much easier:

http://amazon-ec2.rubyforge.org/ 

are friends run this y-combinator startup all on the amazon platform (ec2 and s3) and things seem to be working out well for them so far. 

http://www.anywhere.fm/player/

 -sean

EC3 looks like it would be a great idea for computer animation which has episodic need very high computation loads. Downloading the rendered files may be problematic, but this is a very cost effective way of obtaining arbatrairily large amounts of computer power.

dB