I am considering using GAE as a kind of CDN, to host an entire static website. Soon they will start using new pricing. Does every site visitor start a frontend-instance? What will be the cost implications for a low-use website, that under the current pricing would be free. I would be using the Free version with a quota per app per day of 28 free instance hours. Not sure what that actualy means though.
Static content may not start an instance at all - from http://code.google.com/appengine/docs/java/config/appconfig.html
App Engine serves static files from dedicated servers and caches that are separate from the application servers.
If it does then this blog post does a good job of explaining how the instances handle traffic.
If a request comes in, an “instance” is spun up to service that request, the instance will that stick around for 15 minutes ready to serve any new requests. The act of spinning up an instance takes some so having it ready and waiting is theoretically good.
It also explains why 28 hours a day are required. The bottom line is though, that provided you don't exceed the other quotas associated with the Free version (like bandwidth) you can serve your website for free.
Update: This tool http://drydrop.binaryage.com/ allows you to host static content from AppEngine (via http://www.nata2.org/2011/01/26/how-to-use-app-engine-to-host-static-sites-for-free).