There's another side to the disputes too. It generally screws over merchants and sellers, especially if they're selling digital services. It's a quite common practice for fraudsters to buy something digital and then either make a dispute or do chargeback. The seller can't really do anything else than accept it and pay additional money to cover fees. So not only the seller gives away the item/service for free, he actually loses money. Challenging it can easily lead to your account being limited or blocked, so if you rely on those transactions in your business you generally just have to take the loss.
However, such thing is much harder thing to pull out with other services like Moneybookers, WebMoney, Liberty Reserve and the now-gone ePassporte (and various others). All transactions are final, so it doesn't screw up the seller. That's why sometimes merchant require buyers to wait several days to get their digital goods or services if they're paying with PayPal.
Another thing about PayPal really are the fees. They might be ok for single purchases, but they stand to go really high if you take in lots of money, or for example get your payments via PayPal. This is especially true if you work with something like affiliate marketing and the companies pay their commissions via PayPal to international affiliates. If you generate the normal wage amount of commissions, lets say $3000 a month, the fees take $100-200 out of that. Other payment options do not take that much. For example ePassporte took $0.30 per transaction. That's why I generally use other services than PayPal, but sellers most likely have to use it as sadly PayPal gained the marketshare in western world, especially US.