This works out great and results in cost savings, as it can survive spikes, plus during the night the traffic is at most half or even less than the traffic you get during the day. I had a setup that was handling over 30,000 reqs/sec and during the night it kept about 6 h1.medium instances active, while during the day it could go upward to 20 instances, but was usually stable at around 14 instances.
This article mentions ELB, but I don't understand - does Google's Cloud Compute offer something similar? Can one vary the number of instances based on the incoming traffic or other metrics?