I highly recommend converting it to an EBS AMI. I have 4 of them that I made. 32 bit, 64 bit, bare bones, yum updated plus dev tools.
Agreed, EBS is much easier to work with if you want a "traditional" VPS type server.
I converted to an EBS AMI via these instructions:
http://webkist.wordpress.com/2010/03/16/creating-an-amazon-ec2-ebs-ami-from-...
Takes about 10 minutes each.
If you use the command line EC2 tools from Amazon you'll run into a few snags during install, I've documented getting them running on Fedora:
http://kurt.seifried.org/2010/12/08/getting-amazone-aws-ec2-api-tools-workin...
Wayne Walker wwalker@solid-constructs.com