I like the way they're dealing with this. Acknowledge the problem (and actually call it a "problem" instead of handwaving aroung it), and stop charging for the service until they fix it. This is a good pattern to follow if you run a service that ever runs into issues that affect your users.

On the performance issue itself, I actually used AppEngine for a project when it first came out and was astounded at how poorly it performed in general. Any page requiring more than a single "select where id={}" query would regularly throw CPU warnings at you.

I couldn't imagine building a site even as straightforward as HN on top of it. As soon as you had a page needing a dozen queries to construct, you'd run into the wall.