The hourly, broken-up billing is a smokescreen; for exactly what you get out of a (now) Linode 1024, you'd pay $50+/month or so on AWS. Don't forget total bandwidth, an elastic IP, and so on.
The ongoing TCO of AWS is much higher than Linode, of course. But that's precisely my point: you want to capture customers at birth, incubate them into adulthood, and then charge them a lot of money now that they can afford it.
Although if you want to be pedantic, let's say "actually useful, potentially-production barrier to entry". There. Fixed.
I don't find my cheap t1.micro based IRC bouncer / VPN / reverse SSH endpoint / static-content generation box to be an awful joke at all. They're quite useful for many things.
There are $10 VPS solutions out there, but their poor reputations lends credence to the idea that $10 VPS solutions are not where the money is at.
Its not a smokescreen if you are using AWS for a cloud (e.g., dynamically provisioned according to need) server infrastructure rather than as a simple VPS.