Yes, it makes Ops work more difficult, but as someone smart said regarding software: if something hurts, you're not going it often enough :)
Typically the network or SAN becomes oversaturated and the vm's shit the bed. AWS on the other hand was considerably more reliable and I'd argue they've made better decisions rather than cut corners.
What you said, on other hand, was meaningless given that OpenBSD has had bugs that could lead to a crash. Real question is, "Do Xen or security-focused virtualization schemes (a) reduce number of vulnerabilities with impact of kernel-mode 0-days, and/or (b) prevent, contain, or facilitate easy recovery from OS- and app-level 0-days?" Prior experience in security-focused efforts show yes to both questions. Xen isn't one of them as the existence of the Xenon project shows. However, it's small size and improvements over time make it substantially less risky than an arbitrary OS + software combination esp if above layer is also addressed (eg MirageOS). Even Galois Inc.'s conservative teams are using it in some work.
Also, it's worth mentioning that EC2 instances are meant to be ephemeral; Amazon doesn't provide any semblance of a guarantee that your instances won't reboot, and assumes that you intend for all your "machines" to be arbitrarily rebootable. Not saying that any hypervisor implementation right now is particularly good; only that Amazon isn't exactly the best representation here.
