According to a benchmark test run by John Quinn & Cailin Nelson,
Drupal systems perform very well on amazon ec2, even with a simple single machine deployment. The larger hardware types perform significantly better, producing up to 12,500 pages per minute. this could be increased significantly by clustering as outlined here. The apc op-code cache increases performance by a factor of roughly 4x. The average response times were good in all the tests. The slowest tests yielded average times of 1.5s. again, response times where significantly better on the better hardware and reduced further by the use of apc.
Amazon uses Xen based virtualization technology to implement ec2. The cloud makes provisioning a machine as easy as executing a simple script command. when you are through with the machine, you simply terminate it and pay only for the hours that you’ve used. ec2 provides three types of virtual hardware that you can instantiate.