lammert - 3:32 am on Dec 1, 2010 (gmt 0)

Amazon EC2 instances are paid per instance per runtime. Having more instances each running one database will cost you more money than having all databases in one instance. You can have multiple databases on one EC2 instance, so from a financial point of view it would be wise to run all databases from one EC2 instance.

I am not sure about the functionality and pricing of Amazon RDS instances. Because it is fully compatible with MySQL 5.1, you should be able to create more than one database in one instance, which is also more cost-effective than having one instance per database.