This is the error I recieve. When I revert to using 6u30, it works fine. AppEngine must be updated now to fix this bug.
Initializing App Engine server
[ER
This bug seems to be fixed with GAE 1.6.4
java version "1.6.0_31" Java(TM) SE Runtime Environment (build 1.6.0_31-b04-415-11M3635) Java HotSpot(TM) 64-Bit Server VM (build 20.6-b01-415, mixed mode)
The workaround did not work for me.
I have solved the problem by uninstalling jdk and runtime env 1.7.0_03 and installing jdk and runtime env 1.7.0_02 (JDK 7, update 2 from archive - http://www.oracle.com/technetwork/java/javase/downloads/java-archive-downloads-javase7-521261.html#jdk-7u2-oth-JPR
Another possible solution that worked for me is to download appengine-java-sdk-1.6.3.1 and to configure this as standard appengine sdk.
As it was said before - download App Engine for Java 1.6.3.1 from this url: http://code.google.com/appengine/downloads.html Then unzip it to some folder and then go to Eclipse, choose Window -> Preferences -> Google -> App Engine -> Add and find folder with downloaded files. After it make sure that you check the new version as active and click OK. This solution worked for me.
This is a known bug: http://code.google.com/p/googleappengine/issues/detail?id=6928
Workaround is to add this line to your run config:
-Dappengine.user.timezone=UTC
For some people it must be:
-Dappengine.user.timezone.impl=UTC
Seems that the latter works if GWT is included; if you don't use GWT along with GAE, then use the former.