This solution isn't designed to replace fault-tolerance on local hardware. It is for close to realtime offsite replication and backup.
Data in S3 is stored in at least three geographically separate locations and snapshots are very fast and very efficient on storage space.
The final major advantage you get through a solution such as this is that if you do have your primary site go down (floods, tornados, etc), you can bring up all your existing images via EC2 without having to have a bunch of redundant hardware sitting around waiting for disaster to strike.
And what do you pay for this? $125/month plus a per GB storage cost CHEAPER than enterprise storage generally is.