I like PayPal because I generally have a balance from my online business, so it's not as painful as having to pay the credit card bill later (and there's some protection to me as a buyer and as a seller if things go wrong). The protection is there for most credit cards, too - but as a buyer I don't have to give the online small business my card number, so I feel more secure going through the "blind" system of PayPal. (And I've only had one problem with my number escaping the system somehow, and PayPal made good on it to the tune of $999 USD.)

As a seller, I have to pay a premium to PayPal (as you know) to use their service, but it's worth it to me (and probably no worse than paying the vendor's fee to the credit card companies). AND this way I only pay one firm, not one to each "brand" of card I accept.