Can you explain this setup a little more? What type of applications are you working on and in what language? How do you send code quickly to the server (i.e., do you have to commit code before you execute)?
When I'm waiting on code, I'm usually doing database stuff. At the moment I've been working on the same database conversion for weeks, that takes a few minutes to run on an XL instance, and about half an hour on my macbook pro.
I have an svn checkout on the EC2 box (which I update each reboot), and I scp the file I'm working on over for test runs in between commits. I'd use rsync if it were a bunch of files at once, but it usually isn't.
It also sometimes runs Perl/Catalyst web apps.
I save the image each day (when I remember to turn it off), but a smarter setup would be to simply mount my working directories on an EBS mount.
How often are you waiting on your computer? How much is your time worth, compared to $0.80 an hour?