Amazon has two interesting services for developers.
One is Simple Storage Service (S3) that allows you to store and retrieve almost any amount of data. "It gives any developer access to the same highly scalable, reliable, fast, inexpensive data storage infrastructure that Amazon uses to run its own global network of web sites."
The other one is the just-launched Elastic Compute Cloud (EC2) (limited beta), a service that enables you to use Amazon's computing power for your own needs. You can install your own applications and libraries and select the configuration.
Maluke.com explains it's not too expensive to use EC2: "It costs 10 cents per full hour of usage + usual S3 bandwidth fees. That means that if you run it 24/7 it will cost around $72/month + bandwidth. That's cheaper than a dedicated server (with reliability similar to what I expect from Amazon) but more expensive than an unmanaged VPS. However, look at the specs: an instance is roughly equivalent to a system with a 1.7Ghz Xeon CPU, 1.75GB of RAM, 160GB of local disk, and 250Mb/s of network bandwidth (bursting to 1Gb) and that's a lot of power, sounds like Amazon will put a lot of smaller hosting companies out of business."
The service is very useful for start-ups that need a lot of computing power and a good scalability of their service.
I think Google needs to offer a similar service to attract more developers and to outsource the power of their servers. Google already has a proxy service and a open-source software hosting project. Maybe a free virtual computing environment (a Google Grid) is not that far.