Amazon EC2 Ubuntu problems with apt-get

Your /etc/interfaces file looks fine, and since you managed to run apt-get update and apt-get upgrade successfully, this indicates that your network config is good.

As to why you can't install GNOME, the package is called gnome-desktop-environment rather than ubuntu-desktop. You may want to opt for gnome-core instead, which contains less bloat than the full blown desktop environment would.

If that doesn't work, please could you edit your original question to include the error text from apt-get.

Edit 1
Since you're getting package not found for everything, check out /etc/apt/sources.list and check the repositories for universe and multiverse aren't commented out (i.e have a # at the beginning of the line). If they are, remove the # and try again.

Edit 2
For the key error, try the following command sudo apt-key adv --recv-keys --keyserver keyserver.ubuntu.com 16126D3A3E5C1192. (Source)

Can't you do a

sudo nano /etc/apt/sources.list

? Should work this way. If it does not allow you, maybe you're not in the sudoers file. To include yourself, do

sudo visudo

(that should get you in a vi editor with the sudoers config file open). You can edit using the "I" key to start adding text, but first move the cursor just below where it says

root ALL=(ALL) ALL

From there, as I say, press I and write:

ec2-user ALL=(ALL) ALL

To sabe your changes, press "ESC", ":" and "w", and ENTER. To quit, "ESC", ":", "q".

After editing sudoers, you should be able to try again the

sudo nano /etc/apt/sources.list

And edit the file normally. Should work.