RDS is amazons managed database solutions. So for SQL server you get a SQL instance with very limited functionality. You also cannot access a lot of the system catalogs \ DMV's etc. However you can scale the CPU \ Memory of the instance and the storage \ IOPS with a few simple clicks and very little downtime. It also supports read replica's and multi-AZ support for DR, offloading read activities etc.
Its intended for people that don't want to worry about the nitty gritty of administration. Like any other SQL Server you need to make sure your queries are well optimized, if you go outside your provisioned IOPS due to queries with poor code or a bad execution plan its very easy to bring an RDS instance to its knees.
EC2 offers the ability to build hosted VM's in Amazons infrastructure. With EC2 you pick your base system from a AMI (Amazon Machine Image) which could be windows server \ ubuntu linux etc. You then install what you need inside the image.
For SQL server both have there issues so you have to be very clear on what you want to achieve before picking one or the other. Licensing is also not automatically included in either solution so you need to make sure you are covered there as well.
MCITP SQL 2005, MCSA SQL 2012