There's now a new version of app.example.yaml in the trunk. If you're working with the Google App Engine, read on.
GAE has been evolving a bit, and now supports Python 2.7 (vs 2.5). The new app.example.yaml is configured to use Python 2.7 and support concurrent requests. It can be modified in (I think) an obvious way to do 2.5, but the 2.7 version should be considerable faster, since it uses WSGI instead of CGI. Two drawbacks. 2.7 support is still in beta, and the GAE Launcher doesn't support it, so you'll need to deploy your app through the command line.