It all depends on what country you are located in. If you are in the United States and doing more than $1,000 a month, a merchant account with an electronic payment gateway is usually better for you in the long run.
If you are not operating a properly formed company, then paypal is probably what you want. With a new company without an established sales record you will probably need to start with some of the more expensive credit card processing entities. Some of the lower cost ones may not accept you and most charge fairly hefty, non-refundable application fees. We started with iBill and then moved to a Canadian processing company as our business grew and we had established a track record both in terms of sales and refund requests.
You can upgrade your PayPal to have a virtual terminal and do CC processing too. You might also want to check out authorize.net - very reliable and affordable.