Since Google' target='_blank'>App Engine currently only support Python (and that too version 2.5.2) therefore it limits the available IDEs to develop applications on' target='_blank'>' target='_blank'>App Engine. But the Open community wont just sit still and do nothing! 

PyDev which is an OpenSource plugin that lets you develop on Python for' target='_blank'>' target='_blank'>App Engine in Eclipse IDE.

Pydev is a plugin that enables users to use Eclipse for Python and Jython development -- making Eclipse a first class Python IDE -- It comes with many goodies such as code completion, syntax highlighting, syntax analysis, refactor, debug and many others.

Joscha Feth has a nice and very helpful tutorial on how to get started with PyDev+Eclipse for' target='_blank'>' target='_blank'>App Engine development

[Click here to see the tutorial]