Well to be fair, that is not the same as "you can not upload gzip'd content".

Your complaint seems to be "S3 doesn't automatically gunzip gzip files that I upload", which sounds like the desired behaviour to me. i.e. if I ever upload gzipped content to S3, it is because I want it to be served compressed over HTTP, or because I am moving a compressed backup file to S3. In neither case would gunzipping be desirable, although I do appreciate that compressing during the transfer, and decompressing on the other end, could save some bytes during transfers.