But there are a myriad of scenarios where booting to a AWS image, effectively a CD, is preferred. Having a non-writable filesystem is cool, where that non-writability allows for the saving of temp files and such, but if it were ever compromised, I would just reboot it, and it's exactly how it used to be. Even smarter, I would boot up another clean instance and take that one down, then remap the elastic IP to cut over.

For data that must be stored, I can use a EBS, or a database instance.

Like the grand-parent said, you pick what makes sense. Saying that ephemeral storage is a bad thing would be true if that were all they offered, but it isn't, and it ephemeral images are sometimes preferred.