ec2 or dedicated server?

Hi, we need to ramp up our solution and would like to get some
feedback on what people think is the best way to go: ec2 or dedicated
boxes in a hosting environment (eg 1and1)

We are in Europe, and I worry about the ping times for ec2
instances... they are always over 200ms for us. Whereas if we go with
1and1 in Europe they host in Germany and we get ping of around 90ms.
But ping time is not everything.

What are people's thoughts on using ec2onRails? Does it give you a lot
over doing everything yourself?

Any comments or real world experience reports would be greatly
appreciated!

Phil