I just looked. I'd be prepared to spend loads more on a fully managed setup like that, but the pricing is still 3-4x too high for me. $349 a month for:
- 100% utilization of 1 CPU core
- 4 Rails app servers (ie, Mongrels)
- 640 MB RAM
- Up to 250 GB/month bandwidth
- Up to 45 GB storage
- Up to 15 email accounts
- Additional RAM: $0.25/MB/month
- Additional bandwidth: $1/GB/month
- Additional storage: $1/GB/month
Quick, back of the envelope calculations suggest that I'd be paying 10x more, give or take 10%, than my current hosting costs. I max a dedicated server with both CPU and bandwidth - your mileage may vary (especially if the application isn't bandwidth intensive).