Amazon's EC2 service is far more complex and powerful than a simple VPS. Under EC2 you can manage one or more "instances", with the ability to automate the starting/stopping/creation/destruction of instances. Each instance is a virtual machine running the operating system of your choice, like with a VPS. EC2 is not oriented towards disk space (although the block storage system does provide you with disk space for operating system and software), instead file storage should be handled by S3, which is a system that simply allows you to put in binary data and get that data back out on demand.
Although you could replicate simple VPS functionality under EC2, it would be somewhat more complicated to set up. If you have thought about implementing some sort of load-balancing structure or if you might need to manage a lot of data, then the switch to EC2 could be very beneficial. On the other hand, you'll get less management and support than you would from a VPS provider, and the SLA is different - since EC2 is a "cloud service", there is a generally lower uptime/reliability expectation because cloud systems are expected to be designed in a fault-tolerant fashion.
EC2's pricing is "usage-based" rather than fixed. So instead of just paying $x/month, Amazon's system keeps track of how much compute power you actually use (in processor seconds, I/O operations, megabytes stored, etc), multiplies each metric by a unit rate (usually a fraction of a cent per whatever is being measured) and then adds them up. This generally comes out to be cheaper than a fixed-rate system, but you won't be able to perfectly predict your bill each month (of course, your usage won't tend to change that much from month to month unless something big happens).