Nothing beats "Cold-Hard-Cash", but in today's society, PayPal or Plastic is what it takes to survive. I would say that between 80-90% of my sales are done via the "Inter-Webz", and even though PayPal's fees hurt a bit, they are pretty much in line with what I would pay if I did the "Plastic" route.
A customer who does not even have a PayPal account can still pay you with several different "Plastic Cards" through PayPal.
As a side note, I have a "Master Card" debit card through PayPal that I use often when I buy something from a vendor who doesn't take PayPal. It doesn't cost me anything as the fees are passed on to the company/individual I buy from.
I have been using PP for somewhere around 7-8 years and (Knock-on-Wood), I have never had a problem of any kind. When I do have a problem, I will look to other alternatives.
Robert