It's not so much the difference between free and paid that matters as whether or not the pricing is actually economically viable. The original GAE pricing pretty obviously wasn't, so it might as well have been a free product in that you were relying on Google continuing to want to subsidize it for whatever reason.
How do we as customers know whether a pricing posted by a company is viable or not? What is the criteria for viability? Someone didn't get his bonus because of growth not meeting target? Or the engineering budget has blown up passed expectation?
GAE had to become self-sustaining and now it's less of a risk for its customers. Google wants GCE to compete with AWS so pricing will be have to be competitive.