PayPal is a business and all they're interested in is collecting their fees. If a transaction goes off without a hitch then it's convenient and useful. If you have a problem and you're expecting some sort of "customer service" from PayPal, you're in for an unpleasant surprise. In the last ten years or so I've had three bad experiences with PayPal--two as a seller, one as a buyer.
In the two cases where I sold something and took PayPal payment, the buyer disputed the charges (once saying they didn't receive the item, once saying it was defective). Despite having a tracking number and signature confirmation on the first item, PayPal refunded the buyer and debited my account. In the second case, PayPal refunded the buyer and debited my account and the buyer kept the "defective" item.
In the case where I bought something, the seller sent me something that was completely different than what I ordered and though I was willing to pay shipping to send the item back, the seller (and thus PayPal) wouldn't refund the purchase price.
So essentially, you can get stiffed on either end.
Timothy is 100% correct: The main thing to keep in mind is that you DO NOT want to give PayPal access to your bank account. There is nothing in the PayPal agreement that prevents PayPal from making a withdrawal that creates and overdraft on your account if there's a charge. Once you sign the PayPal terms, PayPal can pretty much do whatever they want with your bank account in terms of withdrawals. For instance, if you get a credit and then the buyer disputes the transaction and they decide to take that money back, they're going to withdraw it directly from your account. If you've already spent that money, you're looking at an overdraft. In my opinion this is a Bad Thing®.
The "safe" way to use PayPal is to ONLY give them a credit card number. If you have a problem, contact your credit card provider and let PayPal work it out with them. The one time I had a problem with a seller, that's what I did. AmEx basically told PayPal to suck it and I got my money back. If you're selling stuff, when you have a balance in your PayPal account, either use it to buy something you want from someone who takes PayPal or have them send you a check.
In the U.S.A your liability for fraudulent credit card transactions is limited to $50. There's essentially no limitation on the bad things that can happen if someone has direct access to your bank account.