A good strategy I've used with EC2 for the past 6 months is to always purchase spot instances using a bid price that is just slightly above the on-demand price. Generally spot pricing stays around the much lower reserve pricing but will occasionally spike. By doing this, you basically get reserve pricing without having to pay the upfront reserve fee, and can keep your spot instance online long term. This site provides some useful historical data on spot pricing: http://cloudexchange.org
I have been horribly burned and disfigured following this advice. It's important to keep in mind that just because it's unlikely the spot price will go above the reserve price, there's nothing from preventing that. It has in the past, and it will again.
The important take away: Don't use spot instances unless you are 100% okay with the idea that your machines will disappear without warning at some point. Let that sink in.
Presumably, there are people out there using it for what the things it (was likely) made for -- short computational tasks, temporary processing, or jobs that require lots of computation but aren't time sensitive -- meaning there will always be people who aren't using the instance 24x7.
Still, I wonder the same thing -- actually, whether or not it's possible for the spot pricing to go higher than the on-demand pricing, etc.
However, they can be great to help fill out your server cluster with things that don't always need to stay up (like Mongel servers). Buy some reserved instances, then put out several spot bids as well for things you can load balance to.
That said, keep in mind that if you need to keep at least one instance up, you need to put them in multiple availability zones, or vary the max spot prices - if there's a load spike that leads to your spot instances being terminated, it'll likely hit all of the spot instances at a given price in the same AZ.
