Class file name case-sensitivity

Is this due to me using Google App Engine on Windows? And not a typical LAMP stack on Linux?

Yes, it is because of your Windows enviroment. I develop on a Windows machine using wamp and it is also case insensitive.

What are the repercussions if I don't give file names an upper-case first file name?

Your application will break. Linux is a case sensitive enviroment. You will need to rename all files that require uppercase.

Guess it's better safe then sorry.

I'm not sure what OS the production GAE runs on mind you... I'll have to deploy the code and see if it works!