Amazon EBS store vs Instance Store with Termination turned off

Unless you're using an EBS-backed EC2 instance the AMI image is extracted to a 10GB drive image that is recreated when the instance is started. I use instance-stored EC2 instances instead of EBS-backed ones for all my server instances. I then simply make the EBS volumes whatever side I need and mount them as secondary drives.

With the EBS volumes I found that using the xfs filesystem and simply using the entire EBS volume without any partitioning was the best course of action. To increase the volume when it was necessary I would perform a snapshot of the existing EBS volume and then create a new larger volume built from the snapshot. You then simply detach the existing EBS volume and attach the new one. Once the new volume is mounted it will show as the current volume size until you run the xfs expand utility command that has to be ran while the filesystem is live. Checking the capacity after that is done will show the new larger size.

Now if you're using an Ubuntu AMI you can install the ebsmount package and create a hidden directory on the EBS volume and configure the system to actually automount using udev when the EBS volume is attached to the EC2 instance.

This can't be done from the GUI, but you can attach them via the command-line tools.

ec2-run-instances ami-abcd1234 -t m1.large -b sdb=ephemeral0 -b sdc=ephemeral1 [...]

The key there is the -b command, as that tells ec2-run-instances how to set up the block-mappings. If you had several EBS volumes to attach to it, you'd do that there. For the instance-local storage, you need to explicitly declare their mappings to the instance when you create it.

Once you have two, you can do with them as you will.