I am planning to run a web-application and expecting a traffic of around 100 to 200 users. 

Currently I have set up single Small instance on Amazon. This instance consist of everything – the Webserver(Apache) , the Database Server(MySQL) and the IMAP server( Dovcot). I am thinking of moving out my database server out of this instance and create a separate instance for it. Now my question is –

* Do I get latency while communication between my webserver and Database server( Both hosted on separate instances on Amazon )
* If yes, what is the standard way to overcome this ? ( or Do I need to set up a Virtual Private Cloud ?)