Sooner or later Paypal has to deal with Bitcoin. Ignoring Bitcoin could kill them.
However that doesn't mean that this specific news is true.
Personally I prefer Paypal to vanish, because it's primarily a scammy mess.
ya.ya.yo!
TBH I dont see paypal having any problems with Bitcoins any time soon, Paypal is very easy to use compared to bitcoins and 99% of people online either use it or have heard about paypal.
If you talk to people who use the net about Bitcoins 99% of them say "Whats that"
I was talking to a freind of mine and even after showing him some sites and this forum he still did not get the concept of Bitcoin
My belief is until Bitcoin or any other cryptocoins become a lot more user freindly both with the mining side and the payment side of things for novice web users it will not hurt paypal at all, because paypals interface is just so easy to use.