If you are going to use paypal, you can protect yourself against chargeback by making sure the seller pays using their bank account and not credit card, and that he is paying as a "service." I believe this kind of payment cannot be charged back. Do some research on it.
If you actually talked with the person over the phone not just e-mail and they have deposited the money in your Paypal then there is no reason to not go through with the transaction because at that point it would be up to you to just ship the item out. The buyer did their part. General rule is always do business locally and face to face on Craigslist though.
Thanks for the advice guys. Mixed opinions I guess. I'm just trying to make sure I do everything I can to stay protected. Thanks for the info Zboy. So, here's what I got. If I use Paypal... Make sure: 1. Address is verified on Paypal 2. Bank account attached to account 3. Paid as "Purchase:Goods", not personal. I'm trying to figure out what the Paypal fee is going to be on my end for $200. The buyer is going to have to pay the fees, since they are requesting the use of Paypal since they live a good ways out from Nacogdoches (where I live).