I've been a strong GAE proponent since the very early days [1]; GAE's sudden price announcement has made me question my belief in PaaS. Perhaps IaaS really is the level to build on: unless you're using bespoke stuff like AWS auto-scaling you can plausibly keep your infrastructure code "on the outside" of the service itself.
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[1] Here's my talk at I/O 2009, when App Engine was young! http://www.google.com/events/io/2009/sessions/AppEngineNitty...
I have convinced all my clients this year to do their new projects on GAE.
The first thing I worked on was a simple abstraction library to sit on top of GAE so you could port away from it easily if you need to later on. I plan on releasing the code at some point in the next few months (the db part is the hardest, going to support running on Riak for now)
Also, I recently integrated the Google Prediction API into a product. Damn that thing is hot - coolest new thing I have played with in a long time. Those additional service API's make GAE a dream.