The sense that the app store has been a neglected, second-tier priority is deep enough now that it will take them a while to regain significant developer trust. AWS is very close to a de-facto standard now. Edit: I mean app engine, the hosted web service. Not the app store. Thanks.
I guess you are confusing the Google App Engine's App Gallery : http://appgallery.appspot.com/, which has been removed for some reasons and the Google Apps Marketplace : http://www.google.com/enterprise/marketplace, which is the actual App Store, where you could pay and install apps.
App Gallery was just a GAE application show-case center, and most likely was causing confusion to Google Apps customers too.
I am still a developer who trusts GAE (my app was on the appgallery and is also listed on marketplace) and believe that they will continue to compete for developer mind-share, as they proved yet again with this performance update.
Let go of the fear, uncertainty & doubt and hop on to try an app. You will like it too.