The promise of the cloud was a goodbye to limits. Deploy to the cloud, and you'll never run out of anything. Ever.
Amazon (, promise of): We add resources faster than you can use them, kthxbye.
Google apps: Hit the once-in-a-lifetime really, really big one, and we'll be serving up 503's to your customers instead of writing invoices to you. Oh, and if it's sustained we might need you to spend critical time re-deploying to a different architecture.
The difference between the two is that Amazon isn't free. Its pay-per-use.
Provided that you stay within the "free" quota, an AppEngine app can be developed/deployed for free.
One is more "hobbyist" than the other. S3/EC2 is used all over the place by professionals, whereas AppEngine has yet to to really achieve that same kind of ubiquity (in terms of developer mindshare).
Amazon (, promise of): We add resources faster than you can use them, kthxbye.
Google apps: Hit the once-in-a-lifetime really, really big one, and we'll be serving up 503's to your customers instead of writing invoices to you. Oh, and if it's sustained we might need you to spend critical time re-deploying to a different architecture.