So there seem to be some major trade-offs between AWS and dedicated servers, the most obvious of which being that AWS seems much more difficult to configure, while it's easier and cheaper to scale.
Considering I only have experience with setting up dedicated servers, I was wondering if someone with experience setting both up could comment on whether the difficulties of using AWS outweigh the benefits.
In the end I chose to run Xen on top of dedicated hardware, which has essentially bought us the best of both worlds: simple scaling and low costs. Granted, it would probably take me a couple hours to start up a dozen more VMs (I'd need to requisition new hardware) as opposed to a few minutes and S3 is still cheap for mass storage, but neither of these points had any relevance to our situation.
As mentioned by others, it all comes down to what your project needs.