EBS data is backed up in multiple redundant ways (using erasure encoding I think).
Local storage is not intended for permanent storage, and is more use at your own risk. That's also why most of the new EC2 instances don't even support local storage.
That's the cost of a new 500GB SSD per month! For the cost of three months' EBS storage and a couple of hours you could setup your own RAID array with a spare for backups and possibly get better uptimes than Amazon :P