Or it could be that AWS doesn't see S3 as a product per-se, but rather as an infrastructure piece that is a building block for other, more full-featured products. My understanding of S3 (and Dynamo) is that it/they started as tech used for running Amazon's internal systems. Someone realized they could get more revenue by offering their internal publicly and stuck a price tag on it. Services like de-duping, compression, etc. are more in the realm of Jungle Disk and tarsnap: third-party resellers that become a front end to the infrastructure provided by S3.

What S3 and other storage services sell is not space as much as reliability. No question: S3 is more expensive than a few file servers in your back room. Cloud storage services sell reliability and availability.