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I'm thinking of building a Restful app on either App engine or ec2 devloped in Java. I'm interested in opinions/experience of using the two options for this. The primary purpose is to create web services to write and retrieve data through a mobile device...basically creating an API for the service I want to create. It seems to me it would be quicker and cheaper in the beginning to go with google app engine using either restlet or grails.But I also think that I could run into problems in the future when I want to so somthing more advanced and might be restricted by app engines environment.

I also want to be able to do data analysis on the data in the datastore as well. It seems that with app engine this would be hard as I don't have direct access to the datastore ( in Amazon I could still have access to the underlying db if I go with MySQL ) .

A: 

Do you actually mean 'direct access'? Your question implies that you want to write an API, which is quite different.

If you do want to write an API, I would recommend App Engine*, and simply replicating (via your own code or the bulkloader) the data to a local database you use to do reports, etc.

Nick Johnson
What I want to be able to do is run analysis on the data for say trends or be able to create reports on the data. The primary need is to create REST services. ( of course i could create a REST like interface for the reporting needs. )
imran