AppEngine is being used, but I would bet not nearly to the degree that AWS is. One thing that Google could do right away is to offer a (hopefully reasonable) monthly fee to keep instances active - loading request times are a bummer and it takes some effort to keep them reasonable (e.g., use Python, or use Java without JDO or anything that takes a while to initialize).

Some things are great with AppEngine: admin web app, ease of deployment, and being able to write Wave robots easily.

For long loading request times, it would be great to pay perhaps $5 to $10 a month for always keeping one instance active.