Thank you all for the feedback, it is extremely useful for us.
From this, I believe the action items for us (apologies if I have missed out anything, please correct me):
* Work on making it clearer which environment and which runtime you should choose for your apps and cut out the marketing prose.
* Provide more technical details on the differences between first generation and second generation runtimes.
* Be explicit on what libs are provided and what need to be vendored.
If y'all want to provide more feedback please feel free to add to this thread (I'll be checking it periodically for a few days) or contact me via email - lla@(you know the domain).
Disclosure: I work for Google on the App Engine team doing documentation.