I find EC2 to be very expensive for development environment needs. The micro instance is a joke because of its slow IO and CPU availability, yet the small instance costs more (compared to Linode) and gives you more RAM than you'd need in a development server.

I find Linode 512MB hosts more than enough for development need, and the automatic backups make me feel better about leaving unfinished code and scripts on my server.

Also, if you gain a team member, you can easily clone your VPS to make a new development environment for the team member.

With all that being said, I use and encourage all my employers heading to the cloud to use AWS for production servers.