I've written vigorously (in previous comments) for using cloud servers like EC2 over dedicated hosting like SoftLayer. I'm less sure about that now. The issue is that EC2 is still beholden to the traditional points of failure (power, cooling, network issues). However, EC2 has the additional problem of Amazon's management software. I don't want to sound too down on Amazon's ability to make good software. However, Amazon's status site shows that EBS and EC2 also had issues on March 17th for about 2.5 hours each (at different times). Reddit has also just been experiencing trouble on EC2/EBS. I don't want this to sound like "Amazon is unreliable", but it does seem more hiccup-y.
The question I'm left with is what one is gaining from the management software Amazon is introducing. Well, one can launch a new box in minutes rather than a couple hours; one can dynamically expand a storage volume rather than dealing with the size of physical discs; one can template a server so that you don't have to set it up from scratch when you want a new one. But if you're a site with 5 boxes, would that give you much help? SoftLayer's pricing is competitive against EC2's 1-year reserved instances and SoftLayer throws in several TB of bandwidth and persistent storage. Even if you have to over-buy on storage because you can't just dynamically expand volumes, it's still competitively priced. If you're only running 5 boxes, the server templates aren't of that much help - and virtually none given that you're maybe running 3 app servers, and a replicated database over two boxes.
I'm still a huge fan of S3. Building a replicated storage system is a pain until you need to store huge volumes of assets. Likewise, if you need 50 boxes for 24 hours at a time, EC2 is awesome. I'm less smitten with it for general purpose web app hosting where the fancy footwork done to make it possible to launch 100 boxes for a short time doesn't really help you if you're looking to just have 5 instances keep running all the time.
Maybe it's just bad timing that I suggested we look at Amazon's new live streaming and a day later EC2 is suffering a half-day outage.