Hi Mark!
You can get 2 Virtual Private Servers on AWS EC2 for free for the first year. After that their pricing is STILL alot cheaper than what you were paying! But you will have to investigate that by setting up mockup billing as you build your systems and evaluate your needs. You have a whole year.
Their free tier includes a good lot of startup resources:
I personally LOVE EC2 and have had a lot of fun deploying their images (and mine) in the "cloud".
While you really need nothing but Amazon's own management tools to do most anything you might want, the real power of the EC2 and S3 Amazon services is the capacity to build up duplicate images and deploy, manage, and secure the servers using automation tools. Gone are the days when an army of server monkeys typed for days managing all the little things on servers.
However, there's a development API that has allowed others to seamlessly integrate their application to EC2/S3 AWS. CHEF, Puppet, Cobbler and many other customized deployment scripts and tools have been developed in in ruby, python, and perl (github) and J2EE.
Of course everyone has to get into the game, so we see competing deployment tools newly available like Juju, the open source service orchestration management tool developed by Canonical, the company already famous for its Linux-based operating system Ubuntu. What’s great in Juju is that it automates the daily tasks that your infrastructure requires, and it allows you to focus on what really matters to you. All this is made possible by what are called “Charms” in the Juju jargon. A Charm is a collection of YAML configuration files and a selection of “hooks”, which are naming conventions that perform several operations like install software, start/stop a service, manage relationships with other Charms, and more. Since Charms can be shared among different systems, a Charm store is available to share and download them.
So, while I love linode, libvirt and KVMs, I would opt for a better solution managing your own server set on AWS.
Feel free to email me offline for more info or questions.