Excuse me? Not even close. They we're using EC2 (Amazon's elastic cloud) and
it's not in any way related to the hosting environment we're (My company) running since a few years back.
The environment is based upon XenServer (Enterprise version of Xen, an open source virtualization platform)
Also, we do have off site backups, per hour, encrypted.
On a personal note, i highly doubt that bitomat actually lost anything... It's more then possible that they just took the money and blamed Amazon.
EC2 is transient by nature so without really having a handle on how to manage persistent vs. non-persistent storage in EC2 it's not hard to lose things and has happened countless times to small and large users alike. With that said it does provide an easy way to jump, I haven't followed bitomat but if they provide instance IDs and S3 paths one could take some steps to verify some of their claims.