I'm planning on moving to Amazon EC2 If I purchased the 'small instance" which has 160 GB instance storage. Can I increase the instance storage say up to a terabyte? Should I move to the "large instance" or is it possible to just increase the storage capacity?
You can add an EBS-block to your instance. These can be up to 1 TB. EBS volumes are off-instance storage that persists independently from the life of an instance. So when you change instances, you can take your storage with you.