That's just silly given how much of Amazon's documentation strongly encourages you to use multiple AZs and regions for reliability. I've included a sampling of their whitepapers below; this is also what their salespeople tell you and what you have to click past any time you provision an RDS instance, ELB, etc.

http://media.amazonwebservices.com/AWS_Cloud_Best_Practices....

“Be a pessimist when designing architectures in the cloud”

http://media.amazonwebservices.com/AWS_Web_Hosting_Best_Prac... “As the AWS web hosting architecture diagram in this paper shows, we recommend that you deploy EC2 hosts across multiple Availability Zones to make your web application more fault-tolerant.”

http://media.amazonwebservices.com/AWS_Operational_Checklist...

“We have deployed critical components of our applications across multiple availability zones, are appropriately replicating data between zones, and have tested how failure within these components affects application availability”

Fair enough, I stand corrected. The problem is in the culture surrounding cloud services, not with the providers themselves.

So it seems that the only real benefit to utilising cloud services is to make scaling up easier and save money.

I think the main problem is that "the cloud"'s primary audience are developers, not sysadmins. Many developers simply don't appreciate that what you're getting is a [much] easier path to automating your server provisioning and management but you're still in exactly the same position as before regarding any bit of infrastructure's ability to fail at the least convenient moment.