What language (Java or Python) + framework for mid sized web project?
I don't think the datastore is a problem.  Many people will reject it out of hand because they want a standard relational database; if you are willing to consider a datastore in general then I doubt you will have any problems with the GAE datastore.  Personally, I quite like it.
The thing that might trip you up is the operational limitations.  For example, did you know that an HTTP request must complete within 10 seconds?
What if you get 50% of the way through a project and then find that a web service you are using sometimes take 15 seconds to respond?  Now you are toast.  You can't pay extra to get the limit raised or anything like that.
So, my point is that you must approach GAE with great care.  Learn about the limitations and make sure that they will not be a problem before you start using it.
I plan to start a mid sized web project, what language + framework would you recommend?
I know Java and Python. I am looking for something simple.
Is App Engine a good option? I like the overall simplicity and free hosting, but I am worried about the datastore (how difficult is it to make it similarly fast as a standard SQL solution? + I need fulltext search + I need to filter objects by several parameters).
What about Java with Stripes? Should I use another framework in addition to Stripes (e.g. for database).
UPDATE:
Thanks for the advice, I finally decided to use Django with Eclipse/PyDev as an IDE.
Python/Django is simple and elegant, it's widely used and there is a great documentation. A small disadvantage is that perhaps I'll have to buy a VPS, but it shouldn't be very hard to port the project to App Engine, which is free to some extent.