First, GAE. From a developer standpoint, it is excellent. The SDK works well. It is easy to get develop, test, and deploy. I used Eclipse and PyDev, and I was very impressed with it. PyDev does a good job of providing code assist and syntax checking, something greatly appreciated by a statically typed language guy like myself.
Now once you get beyond the development phase, GAE has had some notable problems. I have been subscribed to the mailing list, and it is very active with people having problems. Personally, I had problems with urlfetch returning HTTP 503's when I could go to the same URL and get a nice little 200. This didi give me the pleasure of using GAE's logging feature to identify these errors, but there was nothing to be done about them. The 503's have since gone away, but I was just glad that this wasn't a "real" app that my job depended on.
A big part of the fun of using GAE can accredited to Python. It is a nice language. It is definitely not as elegant as Ruby or Scala. It does read nicely and has a lot of very practical sugar to it. I think it was a good choice by Google to use for GAE. I don't think they use it much for their high profile applications (I think Google Code is written in Python, but not certain.) Python is known to have better performance than Ruby, but I don't think it has nearly the popular as the other common P in LAMP (PHP.)