It's great that EC2 prices are coming down, but they're really not keeping up with the general trend in computing prices.
If you're running a static set of computers on EC2 today, and not making use of other features like S3, ELB, etc, you're almost certainly overpaying by a significant amount compared to even high end dedicated server providers, let alone the cheap end of the market like OVH and Hetzner.
The 'E' in EC2 is the major benefit you get using EC2 over a more traditional hosting provider. If you're just using static instances and don't use other AWS features, you're probably better off just not using EC2. In my opinion, it's priced with the elasticity in mind.
(Yes, there's the option of reserved instances, but they still may or may not be the most cost-effective option for what you want to do in that case.)
So who are the competitors that one should look at? Sincere question. When comparing EC2 to Linode or to Rackspace Cloude, Amazon EC2 still wins. At least when I looked. I could be missing something.
Alternately, AWS was underpriced to start with. There is nothing wrong with charging what people will pay, and a lot of very smart people find AWS to be a huge value-add...
Reserved Amazon instances are not the cheapest but are competitive with some hosting providers. I've seen some comparisons where they're right in line with Rackspace's cloud offerings, with each winning on slightly different specs. And of course Amazon has different bandwidth pricing than almost anyone else (charging per-request as well as per-GB) so that might make the difference.
If you're running a static set of computers on EC2 today, and not making use of other features like S3, ELB, etc, you're almost certainly overpaying by a significant amount compared to even high end dedicated server providers, let alone the cheap end of the market like OVH and Hetzner.