There are a great many people out there who have had a lot of problems with paypal and most of what paypalwarning.com says is quite legitimate. However, their reports are obviously meant to show paypal in a negative way in order to encourage visitors to sign up for free-merchant.com. You'll notice links to that merchant all over their site so they obviously own or have some vested interest in it.
Paypal is good in a way. But some people abuse the chargeback/refund system. I use paypal and e-gold because they are the top 2 most popular sites. I never tried free-merchant.com though ~afkersz