More on Google App Engine
Yesterday Google launched Google App Engine, a platform that lets people create web applications and run them on Google's infrastructure. It's a direct competitor to Amazon Web Services (AWS) such as EC2, S3, and SimpleDB but, unlike AWS, it's free for small web apps (where small means about 5M pageviews per month) and it seems more integrated as an end-to-end service.
This is all part of a broader trend towards platform as a service (PaaS) which includes AWS, Google App Engine, Salesforce's Force.com, and the Facebook platform. (Though I don't think Facebook offers hosting as do the others; KickIt, for example, runs on a server in Mark Logic's data center.)
Check out the Google video linked by Dave Kellogg -- it does a good job of explaining how the LAMP stack can be unwieldy -- the problem Google App Engine is designed to address... I'm not convinced Google App Engine is the answer, however, in part because it will entail completely trusting Google and betting on their app dev model/framework/tools/services.