Currently Google App Engine supports both Python & Java. Java support is less mature. However, Java seems to have a longer list of libraries and especially support for J
I'm a little late to the conversation, but here are my two cents. I really had a hard time choosing between Python and Java, since I am well versed in both languages. As we all know, there are advantages and disadvantages for both, and you have to take in account your requirements and the frameworks that work best for your project.
As I usually do in this type of dilemmas, I look for numbers to support my decision. I decided to go with Python for many reasons, but in my case, there was one plot that was the tipping point. If you search "Google App Engine" in GitHub as of September 2014, you will find the following figure:
There could be many biases in these numbers, but overall, there are three times more GAE Python repositories than GAE Java repositories. Not only that, but if you list the projects by the "number of stars" you will see that a majority of the Python projects appear at the top (you have to take in account that Python has been around longer). To me, this makes a strong case for Python because I take in account community adoption & support, documentation, and availability of open-source projects.