What is the recommended library for python to do everything that is Amazon EC2 related?
I came across boto and libcloud. Which one is easier to use? does libcloud offer the same functionality as boto?
The big advantage of libcloud is that it provides a unified interface to multiple providers, which is a big plus in my mind. You won't have to rewrite everything if you plan to migrate some instances to Rackspace later, or mix and match, etc. I haven't used it extensively but it looks fairly complete as far as EC2 goes. In boto's favor it has support for nearly all of Amazon's web services, so if you plan to be Amazon-centric and use other services you'll probably want to use boto. 
That said, try both packages and see which you prefer.
Python & Amazon EC2 -- Recommended Library?