They should be teaching it to everyone and it should be the default - you start with app engine on any project and only choose something else if it can't be used.
And it's about as cheap as you could make something like that, If google itself finds it valuable, that's a argument in favor, not against, google having some of the best software developers around.
The only limitation currently is it doesn't have postgresql.
(I don't have anything to do with google. I just wish more people used it so more features could be added, and more open source software written for it, and I'd benefit from that).