I've heard of paypal issues on the merchants end.  Specifically, they delivered the "goods" but because they were not physical goods, the buyer simply told paypal that they had not recieved them and paypal took the money back from the merchant.  

You can avoid this by getting confirmation that the merchandise was sent, and I've seen advice to the effect of send anything paid for through paypay through the post not the internet.

Personally I've never had any problems, but I've never sold anything either.

I am:  aka Velocity3d