I have a feeling that Amazon charges heavily. How about rackspace? What about the service?

RackSpace is completely inflexible once a lease is signed. I would never recommend them to anyone. For example, their Managed Backup has a 2 hour guarantee. That really means someone will respond to the request within 2 hours. Our single file restore has taken up to 13 hours.

Both rackspace and Amazon asked for credit card. But, heroku offered Free plan for hosting websites. It works best for me as I'm just a startup..

Rackspace works extremely well and their customer service is fantastic.

I think it depends on the service. Originally they used to be quite expensive but they are constantly reducing their pricing as they scale up (20+ times since they started and these are usually significant drops, eg 25% off S3 pricing across the board in November and several small drops on other services earlier this year) which is great :). I use EC2 spot instances which are generally significantly cheaper than Rackspace. In the end the thing that tipped the balance for me was the sheer number of services you get with AWS and ease of use.

Depends on which Amazon services you use. If you use their processing cycles, it may be a lot cheaper than building your own servers. They have a wide array, so it's good to see how it will be configured to get a price point. Also, I believe you can sign up for free to see what usage you will need/have.

Not a feeling, actual fact. Have you compared plans / services?