We use Amazon S3 at PRX for images and more importantly all our audio files. We love it.

What we really want to do is use EC2 - look at the gigavox success story on amazon's site - we need almost the same things, and want to implement almost the same arch - except using rails and activemessaging.

The problem is the EC2 closed beta - ugh - we've been waiting, oh so impatiently. In the meantime everyone shuold go get their feet wet with RightScale. You get 10 hours to play with, even without your own EC2 keys.