For the original post, read it at http://blogs.msdn.com/windowsazure/archive/2009/07/14/confirming-commercial-availability-and-announcing-business-model.aspx.
(Disclaimer: the opinions expressed above are my own and not to be considered as the official response from Microsoft)
Good post, Hanu! A few comments/observations:
1. Compute is usage based, it's just that the granularity is at the instance level. The more instances you use, the more you pay.
2. Also, you can publish an app into Azure and not get charged until you start running it. In other words, I believe an app can sit there in the cloud without being running and you won't get charged.
3. If you need more space than a SQL Azure business or web edition allows, you can have as many as you want -- you just need to think about how to partion and shard the data.
4. For a simple Excel spreadsheet that lets you calculate costs based on usage of compute, storage, messages, and bandwidth, see Gregroy Renard's post here: http://blogs.codes-sources.com/redo/archive/2009/07/14/azure-services-platform-windows-azure-sql-services-net-services-calculez-vous-meme-votre-prix-d-hebergement-mensuel.aspx .
You can download the attachment at the bottom to get the Excel file.