I agree. Even after you throw in a rack, cabling, switch and backup power supply and assorted paraphernalia and include your monthly electricity bill I'm sure you will still be ahead. And especially so if you consider it on relative performance. I run my own servers and every time I look at the relative value proposition of switching to EC2 I can't justify it on cost alone. That said, the time spent building and maintaining them along with an inability to easily and quickly scale or to deal with server outages etc. means I probably wouldn't make the same decision again. But it was a lot of fun.

I'm not sure the AWS numbers you are quoting match up with the four servers you are building. Using the AWS Web Application "common customer sample" it quotes 6 servers, 4 storage volumes, IPs, bandwidth and load balancing. Backing out everything but the 2 Web and 2 Database servers drops the bill to $670 / month.