Just out of curiosity, why such small blocks?
There are several advantages and disadvantages to different block sizes; but most significantly, larger blocks would make tarsnap less efficient at identifying duplicate data in the (very common) case where part of a file is modified. In the end it came down to weighing all the factors and picking a value which worked well.
S3 PUTs cost $0.01 per thousand PUTs, so writing each of the blocks as an individual S3 object would cost $0.33 / GB for PUTs (plus the normal $0.10 / GB for bandwidth).