Adding a subdomain to my google app engine project?

The instruction in the docs apply to mapping an app to http://api.grape.com just as well as to mapping it to http://api.grape.com -- just don't skip point 5 in the instructions, since it says

If you want to serve your app on the www subdomain, skip the rest of this step and continue with step 6 in this list.

so I imagine you skipped that for your first part. You just need to type api in the Web Address field as shown in step 5!