Compelling Platform
I'm another Appengine Kool-Aid drinker, but I'm still very much alive. My company has provided web apps on it's own Linux servers for years, and I know the cost of scaling a popular app - in terms of dollars, stress and customer dissatisfaction.
So when one of the more reputable (well last year, anyway!) online giants offers to host my apps on a platform with scalablilty and redundancy I can only dream of, and at a cost far less than hosting it on a single server, I give it a whirl. There are definitely challenges in moving from an RDBMS to Google's data store, but so far they have been surmountable, and still easier than designing an app for a scalable database system.
Python, once you've taken the plunge, is excellent. Efficient, logical, concise and readable - the code is practically self-documenting, reducing costs and making maintenance a pleasure.
We are currently completing testing of our first major appengine application, which has gone well - the platform has performed perfectly. We expect this one to be fairly big, generating most of the revenue for our company next year, and for once there is no trepidation about how fast it grows.
We have some gripes - currently there is a quota system in place which limits resource usage, effectively cancelling the scalability benefits. This should disappear when the billing system arrives, which hopefully will be in the next couple of months. If something goes seriously wrong, it will be very frustrating that the only support is a user group, hopefully Google will provide better support for paying customers.
As far as fears about giving your data to Google, I'm fairly sure the only access they will have (or want to have) is via the good old Googlebot, checking our public pages. It's a little like the phone company - we all know they could listen to our calls, but anyone who has worked for a telco knows that they can't be bothered - the value of any information they could reap is far out-weighed by the cost of gathering it.
Only time will tell, but to date the Kool-Aid tastes very refreshing.