This is probably a stupidly simple question to some :)
I\'ve created a new linux instance on Amazon EC2, and as part of that downloaded the .pem file to allow me to
You are likely using the wrong username to login:
ubuntu
ec2-user
root
admin
To login, you need to adjust your ssh command:
ssh -l USERNAME_HERE -i .ssh/yourkey.pem public-ec2-host
HTH