Good news: The probably well-known (though still in beta), Xen-based service EC2 from Amazon is getting a new feature, that some(at least myself di) might have missed since a while: Elastic Block Storage! While until know, changing data on the EC2 system could only be stored in a S3 webservice or any database running on your traditional provider’s host, they now offer a service with “normal” block device storage.
While I’ve been hesitating to spend time getting into the technology and usage of this service, it seems to become quite interesting now!
There is even a clone already, that offer similar functionality (also Xen-based, and even said to be API compatible with EC2): Eucalyptus.
Another EC2 compatible, free and open source platform is Nimbus, see a description of the EC2 support here:
http://workspace.globus.org/vm/faq.html#ec2-frontend
Neither Nimbus nor Eucalyptus fully implement the EC2 API (for example, EBS is currently one thing lacking).