According to this Wikipedia article on Google App Engine:
Developers have read-only access to the filesystem on App Engine.
I have heard of App Engine apps that allow uploads and Google also sells additional storage - if so, wouldn't this statement appear to be incorrect?
No.
Those apps would likely store the uploaded data into the store directly rather than the filesystem.
The additional storage is not necessarily in the filesystem but in the storage itself.
From this Google App Engine page:
An App Engine application cannot [...] write to the filesystem. Applications must use the App Engine datastore for storing persistent data. Reading from the filesystem is allowed
Your app cannot write to the file system. Apps that allow uploads store the uploaded documents/data in the database.
Check out the Blob property, such as in this tutorial for storing images:
http://code.google.com/appengine/articles/images.html
There are also libraries for splitting a large file into pieces for storage as Blobs and put them back together again.
