I'm almost sure, that i can run the same amount of traffic from $100/month dedicated server.
If you're small, GAE is free, but then, you could host anywhere for peanuts - just buy a linode or a small EC2 instance, it doesn't really matter.
Once your site becomes big, cost is going to matter and GAE is as expensive as anyone else, last time I looked, quite a bit more expensive.
So there is really not much advantage, it is only free when it doesn't matter, and when it does you're going to start looking for the exit pretty quickly, not just because of cost but because GAE imposes all kinds of limits which may make dealing with your problems much much harder.
Resource Used Free Billable Charge
$0.10/CPU hour 46.03 6.50 39.53 $3.96
$0.12/GByte 2.54 1.00 1.54 $0.19
$0.10/GByte 0.76 1.00 0.00 $0.00
$0.005/GByte-day 750.78 1.00 749.78 $3.75
$0.0001/Email 0.00 2,000.00 0.00 $0.00