The new App Engine release causes older projects in Eclipse to crash. The new SDK release require a VM parameter in the run command for eclipse to run correctly.

The new project automatically adds the parameter in run configuration. Following is the vm parameter that you need to add if you are using the older projects in the Eclipse.

-javaagent:/Library/Genuitec/Common/plugins/

com.google.appengine.eclipse.sdkbundle_1.2.6.v200910130758/

appengine-java-sdk-1.2.6/lib/agent/appengine-agent.jar