Makes sense to run 2U servers; more room for independent disks; no RAID, no redundancy, 1 disk per virtual machine "slice", so you don't have contention issues when someone else on the box tries to do a dd from EBS to the local non-persistant disk.

1U pizza boxes wouldn't have enough physical drives to break up among the amount of virtual machines you can cram on a box with 64-128GB of RAM.