To check out the price history of small linux instances, download the new release of the ec2-api-tools and run:
ec2-describe-spot-price-history --instance-type m1.small -d Linux/UNIX -H
Running this last night, I saw prices that looked like (times PST):
It looks like there's a substantial discount here with prices ranging from $0.025 to $0.035 per hour (the normal ec2 price is $0.085/hr).
Since I'm in the middle of reading How to Cheat at Everything, one of my first thoughts was why not just bid say $0.10/hour? In this way, you're unlikely to get outbid, but you'll probably stand to save significantly for a large part of the day. Now I'm thinking this probably isn't quite a free market... If amazon needs capacity to satisfy reserved instances, or even regular ec2 instances, maybe they'll just kill off these machines to make room.
Still, this is really very cool. A great option for doing a lot of offline batch processing. I hope we start to see support for taking advantage of this type of model in hadoop. It's also exciting to think that one day maybe we'll see something like this across providers -- bid for time across amazon, sun, etc.
Update: Some nice charts by Tim Lossen at cloudexchange.org.