I've been watching some videos from the build conference re: Inside Windows Azure etc. My take away from one of them was that unless I loaded in a preconfigured VHD into a virtual machine role, I would lose any system settings that I might have made should the instance be brought down or recycled.
So for instance, I have a single account with 2 Web Roles running multiple (small) websites. To make that happen I had to adjust the settings in the Hosts file. I know my websites will be carried over in the event of failure because they are defined in the ServiceConfiguration.csfg but will my hosts file settings also carry over to a fresh instance in the event of a failure?
i.e. how deep/comprehensive is my "template" with a web role?
The hosts file will be reconstructed on any full redeployment or reimage.
In general, you should avoid relying on changes to any file that is created by the operating system. If your application is migrated to another server it will be running on a new virtual machine with its own new copy of Windows, and so the changes will suddenly appear to have vanished.
The same will happen if you perform a deployment to the Azure "staging" environment and then perform a "swap VIP": the "staging" environment will not have the changes made to the operating system file.
Microsoft intentionally don't publish inner details of what Azure images look like as they will most likely change in future, but currently
On a full deployment, or a re-image, you receive a new virtual machine so all three drives are re-created. On an upgrade, the virtual machine continues to run but the load balancer migrates traffic away while the new version of the application is deployed to drive F:. Drive E: is then removed.
So, answering your question directly, the "template" is for drive E: -- anything else is subject to change without your knowledge, and can't be relied on.