Well, one word of advice. EC2 is probably overkill. As for needing good i/o performance, that depends. I'd not go EC2 for a number of reasons, and i/o isn't the big one: mostly, the providers (at least those I looked at) want your app to be written for their server and provide special file services (pay extra). On amazon's, and someone correct me if I'm wrong, you also have to pay for storage and use a special api; the problem here is that said api doesn't match the c api for file i/o. I don't know for sure, but I could see a lot of difficulties in getting it to work; it'll run, yes, but when the instance gets rebooted, the hard drive gets erased in some cases.
To be truthful, getting a vps, about $10-$20 per month, is probably more than sufficient; you have to know how to administrate it, though. Lpmuds, by modern standards (if you're not chaos--go see lost souls sometime right after reboot) really don't use too much