The point is that amazon pricing is fairly static. You get X for $Y. However as the years go by, the value of X decreases yet you are still charged $Y. So basically going to a hosted service I might get a significantly faster machine for my buck. Sure it won't scale as quickly but that might be a minor issue, pick your battles so to speak.
Amazon needs to take into account this, and instead of upgrading everything, just start deflating prices of the old and buying newer hardware every 2 years or so and charging full price for the new hardware. This keeps them well balanced with technology. In the end this just means that instead of buying 1 server, you will buy 2 for the same price outdated servers and vuala.
However thats not quite how servers work and its not like their cost-for-operations is going down with the years as well.