On Azure I can get 3 extra small instances for the price 1 small.I'm not worried about my site not scaling.
Are there any other reasons I should not go for 3 extra small instead of 1 small?
See: Azure pricing calculator.
Azure compute instances
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Look at the fine print - the I/O performance is supposed to be much better with the small instance compared to the x-small instance. I am not sure if this is due to a technology related bottleneck or a business decision, but that's the way it is.
Also I'm guessing the OS takes a bit of RAM in each of the instances, so in 3 X-small instances it takes it up three times instead of just once in a small instance. That would reduce the resources that are actually available for your application needs.
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While 3 xtra-small instances theoretically may equal or even be better "on paper" than one small instance, do remember that xtra-small instances do not have dedicated cores and their raw computing resources are shared with other tenants. I've tried these xtra-small instances in an attempt to save money for tiny-load website and must say that there were simply outages or times of horrible performance that I've found unacceptable.
In short: I would not use xtra-small instances for any sort of production environment
An Extra Small instance is limited to approx. 5Mbps bandwidth on the NIC (vs. approx. 100Mbps per core with Small, Medium, Large, and XL), and has less than 1GB of RAM. So, let's say you're running something that's very storage-intensive. You could run into bottlenecks accessing SQL Azure or Windows Azure storage.
With RAM: If you're running 3rd-party apps, such as MongoDB, you'll likely run into memory issues.
From a scalability standpoint, you're right that you can spread the load across 2 or 3 Extra Small instances, and you'll have a good SLA. Just need to make sure your memory and bandwidth are good enough for your performance targets.
For more details on exact specs for each instance size, including NIC bandwidth, see this MSDN article.