Let this be a lesson to all sellers. Following Paypal rules for using tracking numbers (under $250, delivery confirmation....over $250, signature confirmation), will result in Paypal siding with the seller. This should also be a lesson to 'those' kinds of buyers, the kind that try to get something for nothing. If you try to dispute, and Paypal can verify delivery (even with signature confirm, where the USPS accepts signatures from someone other than the adressee), you don't stand a chance. Using Paypal's delivery confirm shipping label costs what, 18 cents or some absurdly cheap amount (not sure how much sig confirm through Paypal costs, though I don't use Paypal's labels option, which I'll explain further). Due to the USPS not being on the ball and not always recognizing Paypals labels, they sometimes don't scan delivery confirm, and there COULD be a problem there. This is why I spend the extra buck or 2 and ALWAYS use the P.O.'s confirm tags...even the most inept letter carrier see's these tags and gets them scanned in.
I'm located in Canada and they were in the US, so USPS doesn't really apply to this situation. I can get a signature confirmation for $1.50 when I send an item through Expedited mail for between $10-$15.