I don't have a strong opinion one way or the other, but I'd like to point out that micro instances also have diminished networking (besides processing/memory). Depending on what you're doing, this could be a factor.
We can afford a t2.medium or an m3.medium at the price he quoted, which will have better RAM, processing capability, and probably equivalent networking capability, so that isn't really the takeaway point.
The point is, his lambda setup has vastly better capability than your instance, should he need it. Unless you're able to bring instances up fast enough to address your need, which clearly doesn't put you in the same ballpark as him.