PayPal is great. It's a great solution for those new starting out hosts, since it is easy to use, fast to set up, very cheap and extremely efficient.
True, there are lots of "horror" stories... but that goes the same for any bank or merchant account or other 3rd Party CC Processor - so no matter where you go, you decide for yourself.
I've never had a problem with PayPal, therefore believe in it myself 100%. I always make sure I read the TOS and AUP frequently to double check and to make sure that I fully understand it and agree with it.
A lot of these well known "horror" stories are from people who don't read the TOS or AUP, therefore get into trouble and don't realise they are doing wrong. They may not see it as their fault, same as others wont see it as their fault - but if you start a job, do you sign on the dotted line without reading it?
They could say you get $15 per hour... yet without reading the contract, hidden away it may say "You will get $1 per hour paid on a yearly basis - at the end of each year".
Or something to that degree, so always be careful, and make sure you read and fully understand what you agree to!!