The point of EC2 on Rails is to save other people from duplicating the effort of building and configuring a Rails server on EC2. When I started it there were no other public Ubuntu server image projects so I had to start from scratch. I had to write a build script to build an Ubuntu image, patch the Amazon AMI tools to work on Ubuntu, etc., before I could even begin to create the Rails-specific stuff. And every 6 months there's a new version of Ubuntu and I have to do at least some of that over again.
But in the meantime Eric Hammond has created an excellent Ubuntu AMI base install project, it has all the necessary features like installing the AMI tools, getting the public keys on first boot so that you can log in with your EC2 account's private key, regenerating the ssh host keys on first boot, etc. And it has some cool new features like the ability to give an instance an arbitrary script on startup using EC2's "user-supplied instance data". And, it has an active community.
So why would I duplicate that effort?! I'd rather concentrate on improving the Rails-specific features, so I've adapted my build script to be run from Eric's. And by "adapted", I mean "took out tons of stuff that I no longer need to care about"! And when I want to make any improvements that aren't Rails- specific, I can contribute them to Eric's project where they'll benefit more people.
If you're building your own custom AMI, I highly recommend using Eric's base install script. You'll end up with a solid base for your image with way less work, and it has a hook to easily include your own build script to customize the build.
Version 0.9.8 of EC2 on Rails uses Eric's script for the base install, and it will be released in a couple of days (I'm using it in production already).
Seriously, why reinvent the wheel? You gotta love open source!