PayPal is great but you have to learn how to make it work.
Use it in conjunction with a FREE checking account from a bank you do no other business with. If your doing other business (savings, other accounts) PP can attach to those (in the same institution) also. Its in the agreement you accepted.
Also tie it to a credit card that you do no other business on so its ez to watch for fraud.
There -- now you have some protection. When you want to buy using PayPal - use the credit card attached to the account and pay the CC bill on line before charges are assessed. If you receive money via PayPal - Transfer it monthly from PP to your dedicated checking account. Usually you need to leave 50 bucks in the free account - so write yourself a check and move the balance out of the dedicated account to your pocket.
Now your total possible loss - if PayPal comes back to attach - is 50 bucks (or less) and Ill happily risk that for the benefit of instant painless transfers and sales.