Ok, the key to working with AWS EC2 instances is to remember that they are ephemeral and can disappear at any point in time. If your treating it like a traditional server that you have in a rack you're doing it wrong. Just turn it off and start a new one. You are using a configuration manager (puppet, chef, etc) aren't you?
I've learned a long time ago to treat traditional servers in a rack like they can disappear (or get compromised) at any time for a huge range of reasons. You can never be too paranoid.
Well, sort of. As long as you're storing all your data on EBS volumes, you can treat EC2 instances as machines in a rack. Problem with your instance? Reboot, and you'll be good as new.
Now, if you lose an EBS volume, that's totally different. You are snapshotting your EBS volumes, correct?