Nginx and jetty are not the same thing. Nginx is a web server optimized to deliver content. Jetty is an application server built to run the applications. Both can be used together.

Also...Is Amazon EC2 considered virtualization for you?

Just fine is just fine for me, actually.

"just fine" is something all companies I have dealt with would agree with, at least when it comes to servers.

Running closer to the metal often means higher development costs, which vastly outweigh the performance overhead abstraction layers they incur.

You're right about some things getting messed up by virtualization, but you're over-estimating the impact this has on running an online service.