http://appscale.cs.ucsb.edu/index.html
http://www.jboss.org/capedwarf
So even if Google shuts down GAE, you could transition without too much trouble.
Regarding the question itself: GAE is just a friendly face on top of Google's internal systems, and Google is deploying all of their new stuff onto it directly for ease of maintenance. GAE is also well charged so that Google is making a profit off it, so they have no reason to shut it down.
The big issue is if you are a small developer who cannot shell out huge amounts for usage charges. Google is targeting GAE more towards Corporate and the kind of budget a large business has, rather than towards a guy in his basement doing hobby work. The charges are still pretty low though, but it's not unlikely that they may raise in future.
Conclusion:
Deep pockets? Go for it, you can't really find a better scaling option for the cost.
Want free hosting? Not a good choice, look elsewhere.
Indy dev who wants to pay very little and is willing to optimize caching to lower costs? Solid choice, you can get the charges very low for even high demand sites. Keep a sharp watch on billing trends, and test out your site on AppScale / CapeDwarf to make sure you can transition off quickly if billing gets out of hand.
What are some better alternatives? And why are they better?
I've used GAE for some toy apps and a few websites with low traffic. It works great.
I've met a few times with their evangelists/sales/support people in my country. They have always been very enthusiastic and are pushing very hard for adoption by large corps and universities. I don't have the impression they will pull the plug but... you never know.
As for the Premier support option, the few times I needed it they were very responsive and helpful; I do recommend it if possible.
To a solo entrepreneur like me, GAE is a great option and I can't imagine myself managing servers and a full stack, even if it is just building/deploying an AMI. GAE is just too easy.
To avoid vendor lock-in, check out the OpenShift platform [1] from Red Hat. It's open source [2] so you can set it up on your own servers if you felt Red Hat weren't providing the service you required.
[1] https://openshift.redhat.com/community/paas
[2] https://openshift.redhat.com/community/open-source/download-...
[1] http://stackoverflow.com/questions/8276292/google-app-engine...
The reason is that they can twiddle things around behind the scenes without anybody architecting their app around a particular memcache performance fingerprint. If you think about it, that's how you are supposed to treat something ephemeral as memcache anyway, best effort availability, not to be relied on.
I wouldn't worry about this too much. Their datastore being a sort of blackbox is more of a problem. Check out the Khan academy dev blog, this is not a bottleneck.
So I think it's not very reasonable to offer no-SLA components of a hosted platform. It's either there with some assurances, or it might as well not exist at all.