Question 1
If a user acquires certain number of spot instances at a bid price and
the SPOT price increases in the subsequent hours, will he loose all
the spot instances or some of them?
You will lose all of them. Why do you lose all of them? The rules apply to all the instances in this scenario as they all have the same bid price.
http://aws.amazon.com/ec2/spot-instances/
If the Spot price exceeds your max bid or there is no longer spare EC2
capacity in a given Spot pool, your instances will be terminated.
It's also important to note:
You should always be prepared for the possibility that your Spot
Instance may be interrupted.
Question 2
Also is there any other cloud providers providing this kind of service?
Not that I know of. I haven't seen the other big players (like Rackspace) offer spot instances.
Question 3
In case of spot instance, what is the meaning of "shut down your instance" when spot price goes above your bid price.
Your instances gets terminated without notice. This means you have to build fault tolerant applications and be prepared for your EC2 to fail at any moment.
Question 4
what is the benefit of this "shutdown spot instance" for a user?
I assume you are talking about the following "When your bid exceed the Spot Price, your Spot instance is launched and your instance will run until the Spot Price exceed your bid (a Spot interruption) or you choose to terminate them."
Terminating your EC2 is something you would do when you're finished with your Spot Instance, otherwise you will be charged for each hour that it's running.
Question 5
is there a way to tell for automatic shutdown of spot instance when the bid is less than spot price and amazon terminated the spot instance?
You have a few options here:
AWS have an API where you can get information on any of your instances. You can monitor the status through your own code that takes advantage of the API.
You could use CloudWatch to alert you on the EC2 state change.
For reporting you also have access to your Spot Instance Data Feed.