I think the App Engine is perfect for developers who don't want to have to make decisions about servers and infrastructure. This can be beneficial. However, your design must fit their infrastructure. Depending on your application, this may or may not be a good thing.
If you ever need/want/have to migrate your application elsewhere, you'd have to replicate their environment or rewrite the application.
For the kinds of applications I work on, those are deal breakers so I use AWS (which also has its limitations) or some other server hosting service instead.
I run a number of apps on Python/App Engine specifically because I don't want to deal with servers/infrastructure/scaling. Sometimes the limitations aren't ideal, but it's still a trade-off I've been happy with overall.
Right, this proves my point.
You can run Java apps on JBoss. That's it.
You are still limited to using their infrastructure.
Don't get me wrong, that's not necessarily a bad thing.
For many, it's wonderful. I'm just saying that one needs to weigh needs, capabilities and goals carefully before deciding to use Google Apps (or any other "platform") because your application has to work in their platform and moving to another platform could be very costly.
It seems obvious to say, but many technical decisions involve trade offs of one kind or the other. The ones that bind early and have high switching costs are worth thinking through at some depth.
If you ever need/want/have to migrate your application elsewhere, you'd have to replicate their environment or rewrite the application.
For the kinds of applications I work on, those are deal breakers so I use AWS (which also has its limitations) or some other server hosting service instead.