My own best guess is that it's that classic bugaboo: Historical reasons. They've got a big installed base of hardware, software, and ops procedures to support 32-bit small and medium instances, and thus the marginal cost of continuing to run that hardware is lower. Given the choice between (a) a big program to compel all their existing 32-bit customers to migrate to 64-bit infrastructure, and then writing off all the racks full of 32-bit equipment; or (b) maintaining and building out the datacenters and infrastructure that they've already got established, they tend to choose option (b).
Of course, given that the price of compute hardware continues its inexorable fall, in three years Amazon will offer 64-bit at an intermediate price point: The expensive 64-bit large instance of today will be the cheap 64-bit large instance of tomorrow, and people who want real power will be paying for 32xlarge instances.
In a Rails app (for instance), the overall performance of an application is often constrained by how many instances you are able to run in parallel. If a 32-bit box can run 50% (or 100%) more instances of your application than the equivalent 64-bit box with the same RAM, that's great.
With EC2, I can have a server half the price of Rackspace's cheapest instance, but with theoretically unlimited storage space. I could use that e.g. for backing up server data, or as an NFS share.
The one major limitation of Rackspace's service is disk space. It's severely limited, and there's not much you can do about it.
You get /dev/sd[b-p][1-15] as mountable EBS volumes. Thats (15 * 15) * 1TB, or about 225TB. You may even be able to go higher than "p", but I haven't tried. I'm also not sure, you may even be able to attach somewhere other than /dev/sd* .
Either way, after that, your EBS bill is $22,500/mo, just for storage, so you might be able to figure something else out for that cost.
But you CAN attach that to a $14/mo EC2 instance, which was my original point.
Edited to add:
Note that the default limit is 20 EBS volumes per EC2 account. You can request an increase from Amazon if you need more. http://groups.google.com/group/ec2ubuntu/web/raid-0-on-ec2-e...
Still, 20TB is "practically unlimited", for most applications.
Also, in response to your question: I can confirm that EC2 complains if you try going above sdp, or anywhere else.