I just got some web hosting that included a domain with a company called Arvixe. THey are worth looking into as the domain fee is paid yearly (instead of two yearly), and they let you pay the hosting fee monthly with paypal if you want. Very convenient. My initial cost with them was $14 for their cheapest hosting package, which included $10 for the domain. The monthly ding will be $4 through paypal for the rest of the year. I had my site up on their server the next day. Check them out. Godaddy also has paypal now, and they are cheap, but they don't supply log files in case that is important to you. Hope this helps.
www.godaddy.com i used it to buy all of my domains so far , before they did not have the paypal integration but now they do and let me tell you , it is extremely useful!
You can also register domain names through Globat.com although they are more geared towards hosting. No problems there though and they have recently intergrated PayPal.