I think I know exactly what happened. Hopefully this will help Google
fix the issue.
About a week ago I did use my phone for account verification for App
Engine. I did get the code and I typed it in. Then I was presented
with a form to create my 1st app, but I navigated away as I really
didn't want to create one at that particular time. I thought I was
verified so I could come back and create apps at any time. A week
later I came back and the system wants to verify again but it doesn't
like my phone number anymore.
My theory is that because I "verified" already my phone number doesn't
work, but because I have no apps the system wants to verify again.