In Amazon S3 you can now select the location where the data is stored. This is currently "USA" or "Europe". Latency is the issue, but the downside is price:
We charge less where our costs are less, thus some prices vary across geographic regions and are based on the location of the bucket.
The differences are: $0.15(US)/$0.18(EU) per GB-Month of storage used, $0.01(US)/$0.012(EU) per 1,000 PUT or LIST requests, $0.01(US)/$0.012(EU) per 10,000 GET and all other requests. EC2->S3(US) bandwidth is free and EC2->S3(EU) will be charged at regular rates.
I've been looking at hosting recently and it is amazing how many UK/European datacenters are out of space and/or power and how much price per Mbps varies. I assume Amazon is just passing on the costs, but then I also expect them to be operating at a scale where this shouldn't really affect them, hmmm.