As someone who has spent the last year and a half running a 200-(persistent)node environment on EC2, including multiple m1.large and m1.xlarge DB pools, I can assure you those stories stem from FUD and unreasonable expectations.

Yes, EBS is not very fast, especially compared to local disk. You can work around this, however, by configuring multiple volumes in a RAID configuration (as you have mentioned), or by scaling out with additional nodes. The size and workload of your database will dictate which is more cost-effective.

Spooling up many nodes to find the "best" one is completely unnecessary. In my experience, EC2 nodes have been remarkably consistent in performance. I won't say I run a load test on every one, but I will say that over 100,000 node launches, I've never had to shut down a poorly-performing instance that couldn't be attributed to a hardware issue (rare, and for which Amazon sends notifications).

Don't listen to the naysayers. Come on in, the water's fine!