Amazon S3 really rocks. We generate a LOT of thumbnail images at mefeedia.com for all the videobloggers, and earlier this year all these millions of small jpg files were slowing the server to a crawl (servers aren’t generally good at having millions upon millions of little files stored, even though we used a sensible directory approach).
Last month, we were hosting 120 Gigs worth of tiny files on Amazon S3, and transferred 150 Gigs of data. All this for 46 US$ for that month. You couldn’t rent a server for that cheap, let alone you’d have to deal with all the management and scaling problems yourself. Rocks!