Is it possible to clone a EC2 instance data and all?
Nowadays it is even easier to clone the machine with EBS-backed instances released a while ago. This is how we do it in BitNami Cloud Hosting. Basically you just take a snapshot of the instance which can be used later to launch a new server. You can do it either using AWS console (saving the EBS-backed instance as AWS AMI) or using the EC2 API tools:
Cloning the instance is nothing else but creating the backup and then launching a new server based on that. You can find bunch of articles out there describing this problem, try to find the info about "how to ..." backup or resize the whole EC2 instance, for example this blog is a really good place to start: alestic.com