I had an issue with "Mystatichost" over unreliable service. In the past they did return my money when this same issue occured. Here is their reason for not returning my money which is shown below. "Our investigation into your claim is complete. As stated in our User Agreement, the claims process only applies to the shipment of goods. It does not apply to complaints about the attributes or quality of goods received. Therefore, we are unable to reverse this transaction or issue a refund". What does shipment of goods have to do with unreliable hosting service? Btw their decision is final so I won't be getting a refund and I won't be using Paypal again.
They don't see whether the product / service you have got it worth the money, they just see that has the product reached you? and that's all.
All I can say is the last time a hosting company didn't provide reliable service they refunded the money.
It has always been PayPal policy not to give refunds on "non-tangible" goods which is what web hosting is. Though I have seen certain cases where this has been an exception.
Paypal dont give protection against digital products so you should take care while doing such transactions