Ebay has it's uses.... I've gotten burned a couple of times, but the majority of the time I did OK. I think that PayPal is much of the problem. If you could pay directly with a credit card or postal money order for the purchases there, most of the problems would vanish. Once PayPal got bought out by Ebay, it pretty much became just a tool of Ebay. You can pretty much forget about getting your money back when you get scammed. The seller could send you a rock in a box, and as long as he or she can show a tracking number, PayPal will side with the seller. But if the seller is selling nontangible goods, then they will side with the BUYER every time, since there is no tracking number associated with the transaction.
Of course, Ebay is too big now to really fail. And even if it did, I guess the government would bail them out anyway.....