Having properly configured a Development server and a Production server, I would like to set up a Staging environment on Google App Engine useful
We use option B.
In addition to Zygmantas suggestions about the benefits of separating dev from prod at application level, we also use our dev application to test performance.
Normally the dev instance runs without much available in the way of resources, this helps to see where the application "feels" slow. We can then also independently tweak the performance settings to see what makes a difference (e.g. front-end instance class).
Of course sometimes we need to bite the bullet and tweak & watch on live. But it's nice to have the other application to play with.
Still use namespaces and versions, just dev is dirty and experimental.