Not trying to hijack, but I’ve been considering the same move for one of my clients. They are averaging between 3-7 TB/m in video and image delivery. Does this sound like a cloud candidate?
IMHO you’d be far better off saving each size used than doing it on-the-fly, it’ll cost you less for your storage space than it will for the processing power to handle it, plus it’ll be a faster user experience. Of course you can go hybrid - create a script that generates the right sized image, then saves it to disk, then next time it is needed it loads it from disk, that way you don’t have to resize them all to specific sizes when you upload them.
I’ve recently virtualized all of my servers into LiquidWeb’s Storm On Demand service and I’m very happy. I can size up or down servers, make images of a current server, clone, and set backups – all through their web based control panel. Performance has been very good for my services (hosting).
Amazon s3 have just brought out the new s3-RRS option, essentially cheaper storage fees in exchange for less redundancy for non critical data. Still not as cheap as simplecdn though if you’re more bandwidth rather than storage heavy