Three days ago I received an email from Amazon alerting me that "one or more of your instances are running on hosts degraded due to hardware failure.", and giving me a week to migrate to another instance. I have a script that creates daily instance images as a back-up procedure, so the "migration" was just a matter of starting another instance using the most recent image and I was up and running.

I looked back on my logs and found out that the particular degraded instance was running since June without any problems or shutdowns. Not bad for a VPS...

I'm very aware that Amazon provides no guarantees, but I have to say that my confidence on EC2 increased after this incident.