I think you're right that one of the big downsides currently for AWS lambda would be dev tooling, however one of the big upsides is that the code you throw up there should run "forever". This is potentially really useful if you are simply working on frontend code, and hitting these Lambda endpoints as a client.

I've set them up a few times for contact forms and other light pieces of functionality for static websites, and it fits that niche really well. Obviously, I think the serverless movement has some grander notions of the size and scale of applications that could be constructed, so we'll see.