I've been a Paypal user for 10 years, long before Bitcoin appeared. Last month, despite the horror stories, I decided to stick my toe in and try to sell some BTC on eBay. I posted one auction for 1 BTC, which went smoothly, and one for 2 BTC. The buyer for the 2 BTC used a fake email address and eBay account, I'm assuming they wanted as much anonymity as possible. They cancelled their eBay account after the purchase. Paypal put a hold on the transaction immediately, and I emailed the buyer via eBay messages to see if anything was amiss. The buyer responded with an eBay message that the coins had been received. I notified Paypal of this, and waited three weeks for the funds to become available. During this time I received no communication from Paypal. A couple days ago the transaction was reversed, no explanation from Paypal. I only lost $18, but I no longer have any confidence in the way they treat their customers, and I think they might have initiated the reversal with no claim or complaint of any kind from the buyer.
Just wanted to add another warning about Paypal, it really bugs me that I don't know whether the buyer made a fraudulent payment and Paypal didn't notify me that the account holder filed a claim, or if someone at Paypal just decided to cancel the transaction in an anti-Bitcoin rage.
Lesson learned, I recommend keeping your coins far away from any entities with a vested interest in the financial status quo.