hey thats wrong I bought some domains when My paypal account was unverified (that is I added my credit card but I did not enter the four digit expanded use number that time I used paypal and I bought some domains)
I couldn't buy domains on godaddy with paypal because you need a credit card attached to your paypal account in order to buy from them via paypal, which is really lame because if i had a credit card that I wanted to use this type of stuff for - I wouldn't have a paypal account in the first place. Anyways I use namecheap now for all my domain purchases via paypal. They're the best.