As a Buyer: Paypal is pretty good with the buyer protection... I needed it after I paid a guy and never received the item, and after countless emails and no replies, Paypal refunded me the money...
As a Seller: I've never had a problem with Paypal as a seller... although I've never really been screwed as a seller either. Paypal is a great form of payment, especially if you have the Paypal card...
Update: I was just screwed by a buyer on Ebay last month. A guy to which i sold an Xbox live gift card to, asked me to email him the code over eBay... That was a mistake... Guy disputed the charge saying I "hacked his Paypal account"... I contacted Paypal and Ebay and they did nothing. Like don't they have record of this stuff? Meanwhile the guy has multiple feedbacks from sellers, who by the way all "gave" him XBox cards, saying "don't sell to him" and BEWARE"... That was a crappy experience..