Is it profitable to deploy our web application on amazon cloud as compared to normal server?
Currently there are micro, small, large and other types of instances available, if we start from micro instance then we realize that our app needs some more CPU cycle and Ram then how can we dynamically move to next more powerful instance automatically at runtime.
What is the approx minimum yearly cost for a single EC2 windows small instance?
I want to deploy a simple Online quiz application (ASP.net based) on Amazon Cloud which at a time can have maximum of 500 users only.
Should I go for Azure or Amazon?
This is quite a wide ranging question!
There are some fairly up to date price comparisons for Azure versus Amazon on: http://compositecode.com/2010/11/01/cloudthrowdown-part1/ http://compositecode.com/2010/11/03/cloudthrowdown-part2/ http://compositecode.com/2010/11/08/cloudthrowdown-part3-2/
For small deployments, the costs are quite similar - especially after you take into account special offers (e.g. annual purchasing)
It's also worth noting that for ASP.Net MVC there are a few new "cloud" players arriving - deployfu, appharbor, etc.
In general, you can find "conventional" windows hosting cheaper than cloud offerings - but then you can also find more expensive options too. Sometimes, you get what you pay for - sometimes you don't - ask around about individual hosts.
Whether you should move to Azure or Amazon? There's a lot to consider - in general now I'm aiming to move my sites to Azure or AppHarbor in an attempt to reduce operational overheads - my operational overheads cost way more than my hosting - but I don't know if this will really work for me - will know more later.
Finally, on your question about changing instance sizes dynamically - this isn't seamless - you can't just push a button and get larger instantly - but it's not that hard to do.