Django development version vs stable release
Another thing to consider is how you install. I'd be sure to install django from SVN, because it makes updating it MUCH easier. 
I have been using the dev version for a while on my site, and haven't encountered a single bug yet, aside from one that affected the admin site in a minor way (which a svn up fixed). 
I don't have a feel for whether people are using 1.2 or dev, but in my experience, dev is perfectly suitable. Any major errors that you may have in the code will get fixed very quickly, and svn up will get you to the latest code on the off chance that you get a revision with a major bug.
I am about to start ramping up on Django and develop a web app that I want to deploy on Google App Engine. I learn that Google has Django 0.96 already installed on the APP engine, but the latest "official" version of Django I see is at 1.2.3 and its a bit of an effort to install it there.
I am curious which version of Django is most widely used.
So, can you please guide me on which Django version I should ramp on and deploy based on the following criterion

Stability and suitability for production release
Availability for applications (or plugins) and which version is most supported by the community

Thanks a lot!