But so far, I like it:

• It’s only Python (or Java), but you can do pretty much anything you would do in a non-App Engine Python project. You can load pure pythonic third party libraries by just including them in your project.
• The free quotas are really big. It’s enough for a hobby project, and if it becomes successful enough to hit the ceiling you should be able to figure out a way to monetize it to pay your Google bill.
• You can use your own domain name even with a free account
• There is no SQL, but Google’s BigTable seems to be good enough. Heck, that’s what they use for most of their products!

And you get all the App Engine specific goodness: easy authentication with Google Accounts, free hosting with huge quotas, and most importantly easy scalability on Google’s infrastructure… Having to call your hosting company to add new servers is a pain in the ass (and in the wallet), having to create and delete instances on Amazon S3 is a much better, but not having to think about it at all is just pure joy.