As many people have said, it depends on your use case. In my case, I am an 
application developer, not a sysadmin - I like to spend my time making 
applications, not worrying about fine-tuning memcache, database 
replication, software upgrades, and load balancers. Appengine has been 
fantastic for me - my application took off from 0 to over a million users, 
and I haven't needed to think about capacity issues, security or 
availability. I like to say that if my app somehow got onto the Letterman 
Show, I would be popping champagne corks instead of blood vessels - I have 
the best sysadmins in the word looking after my service.

And all of this cost me less than $100 a month - and much less than that 
when volumes were smaller. So Appengine has let me scale from zero to 
serious volume without any pain, and sure, I could probably have saved a 
few bucks hosting somewhere else, but it would have cost me days in extra 
support time (and therefore dollars) and years of life expectancy because 
of the stress involved.

So I LOVE Appengine, and believe it offers very good value. I'm not saying 
you have to love it too - in fact because you sound like you prefer to 
build and maintaining your own stack, you'l probably hate it because all 
the work is done for you - you're a sysadmin at heart. But for developers, 
Appengine is an excellent platform.

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