It is probably irrational since App Engine has come a long way but I remember how Google generally treated their customers early on who were trying to adopt to their platform.
If I write my app against Heroku, I can pick up and move to AWS, Rackspace, Azure, or even a local cloud such as vSphere, VMware Fusion, or Hyper-V, quite easily. That's because the PostgreSQL/Unicorn/Redis/whatever that's on Heroku is the same as what I can run on any of those other services. Even if I use Microsoft's technologies, it's generally not that hard to move form a pure Windows stack to a Mono/PostgreSQL one these days.
That's not true for App Engine. Their database engine exists nowhere else. Their general web stack exists nowhere else. Yes, I know about Appscale, but it hasn't been updated in forever, and empirically, I don't think that HBase's performance is a real replacement for Google's data storage. As a result, if Google radically alters their pricing--as they've done before--then you just have to shut up and take it.
I don't want that kind of lock-in, no matter how awesome the product is.
Appengine is NOT cheap hosting. It IS an massively-scalable, massively-redundant zero-admin development platform - and maybe I'm nuts but I expect to pay for that. I was glad Google set realistic prices and put appengine on a commercial footing, because I don't want it cancelled next time Google has a bad quarter.
Just to put this in perspective, we have four appengine apps that handle about half a million users between them. They generate a 6-figure annual revenue, and we pay Google around $50 a month. Yep, you read that right - $50. We've looked at AWS, but we'd pay a lot more - and that's without factoring in the cost of a good sysadmin to support it.
If you need a company website, appengine is probably not for you. If you're putting on a royal wedding and expect billions of hits for a short period, it's perfect. If you love tweaking your own firewall rules and tuning Postgresql for ultimate performance, you don't want appengine. If you're a development shop that wants a stable, scalable platform with the overhead of a sysadmin, welcome to your new home.
No...no bad taste at all.
Same for Amazon unless you pay them for the premium support which started at $48/month for 12 hours response time. (in contrast, I don't need to pay extra for my Linode's support and they usually response within a few minutes.)
If you are interested, visit AWS forum and search "reboot help" 
You have to have a 10x better product to beat established competition.
Compute Engine has a long way to go to be 10x better than AWS. For most (including me) it's not just about storage and CPU units, it's things like VPC, SES, IAM, etc.
I was an early convert to App Engine, ran screaming from that mess after 2 years of waiting to see the light, there was no light.
Could Google be leveraging their grasp of the world's free information to predict their competitors' pricing changes?