I went to an Amazon's AWS talk in NYC a couple months ago where they brought some start-ups in to talk about their projects, the cloud and how the cloud helped them build their applications faster and better. During the opening talk, the speaker showed some use-cases, one including the New York Stock Exchange and how, at the closing bell, they provision over 3000 EC2 instances to crunch numbers overnight to be ready for the next morning.
A guy from a startup that I was talking to before we were seated was talking about how his company keeps between 5 and 10 instances up all the time for their application (dynamically bringing them up and down to scale with demand) and how they frequently had 4 and 5 sets of these servers running on the side for testing (20-40 instances at a time). He was talking about the metrics they were using to keep track of their use and how it was flawed due to the fact that they had hundreds of instances a day going up and down all the time.
Just because 50,000 instances are started per day doesn't mean that those 50,000 instances are running for any period of time. I frequently bring up an instance, tweak some things, create an image, then bring it down... or bring up an instance to test something for 20 minutes, then bring it down. EC2 has really benefitted my QA/Testing/Experimentation in that I really have an unlimited pool of resources to play with. It's a much more robust system than I have at home with VMWare... vmware was a gamechanger for me since before that, I had 2 physical servers at home and stacks of 40GB and 60GB HDs with multliple versions of OSs on them.
Of course AWS isn't for everyone. EC2 can be expensive for what they offer and the biggest advantage to AWS's services are that they are on-demand and work really well with applications that need to scale up AND down in real-time. If you've got an application that doesn't require to-the-minute scaling responses, it's less expensive to get a physical dedicated server with Xen on it and create your own virtual infrastructure... although if you don't have the skills or time to learn the tools, then AWS offers a much better learning curve.