After using App Engine for two projects at the beginning of this year, I have to say that Heroku is better in almost every way (especially if your app is already open-source and using git for version control). The ability to use an actual production server (Gevent, for example) on a free dyno is awesome.
I am using both at the monent. And I must say that Heroku defenetly has it's advantages, but appengine has: lower latency (for me), more Apis, cdn built-in, ability to run different/test different versions at the same time, backend instances (Heroku has ec2 though), free webadmin with graphs and ability to see errors etc.
