Well unless you roll with a Micro instance (213mb of RAM and dismal performance), the price for a Small on-demand instance (1.3GB memory) is ~$54 per month. You save quite a bit by going with a reserved instance, where you pay about $70 up-front but then your monthly instance price is almost halved, coming in at around $32 per/mo.
Either way, it's going to be more cost-effective at a lower level to go with something like Redis-to-go, Openredis, etc... if you need something simple.
Long story short, if you're on Heroku and (like me) were thinking/hoping that this might be a nice alternative to the various add-ons available ... I don't think that the juice is worth the squeeze. One, you have to administer and maintain things yourself (which is trivial for something like this, so not a big deal) but the pricing doesn't line up. The Redis providers leading the market today are able to do so because they provision the heavy-hitter EC2 nodes and then chop them up.
It's important to note though you can get a free micro instance for a year on the free usage tier. Micro's are like the section-8 housing of the server world, but free is free and beggars can't be choosers ;)
I got $16.5 per month rate for 1 year of a small (which is 1.7gb).
This is dedicated performance, as opposed to the bad performance of a shared system like openredis, which is $25 a month for a small (200mb). (These systems put artificial limits on things like # of ports, etc. They also share with neighbors as you say, which makes them less reliable in performance - noisy neighbor problem.)
So unless you only need 25mb of cache and have very little load, EC2 is significantly cheaper.
I think the main benefit would be for people already running on EC2/AWS. I would imagine (but don't know) that you'd get better latency and throughput between an EC2 instance an elasticache instance than between an EC2 instance and a hosted redis provider.
Also worth pointing out: if you're running on AWS, you'd get integration with your existing tooling like CloudWatch, VPCs, etc.
And last but not least, Amazon is a mature company that you can be confident will be around another 5 years. I don't have that same level of confidence with the majority of Redis-as-a-service providers.
Compared to normal Redis-Paas, it's on the same line, probably cheaper than the average price on ther market. ElastiCache is basically a way to spin up a EC2-backed instance of Redis, with automatic failover and replication. It only handles one node per cluster, and doesn't handle scaling (you need to manual provision, replicate, switch, etc.).
But if you go with a true clustering solution (like Redis Cloud, www.redis-cloud.com), then you get automatic transparent scaling with zero downtime thanks to dynamic sharding:
