Ian, thats a good question, a question paypal have never answered. I have had many sales only to find that paypal have held my money for 21 days and even 28 days! I have 100% feedback on ebay as a buyer and seller and in the past have had to threaten legal action to get my money. When paypal have held my funds in the past I have not been able to send the items sold and that has caused big problems. I understand that buyers can take advantage of this 21 day system. I sold a guitar not long ago, payment went through paypal and the buyer picked it up in person. Payment was held over 21 days and then paypal restricted my account telling me to provide my passport and back statement to verify my identity! I had a long process of threatening legal action yet again and won in the end. Took a lot of effort to get my money.
For small amounts like £20 -£60 payments I have had no problems, the money is available to me instantly then, but higher value items and the money gets held and this causes big problems. One time my money was on hold and ebay decided to take money out my bank account to charge me for the selling fees of that item. Because my money was on hold from paypal and ebay took out money from my bank account I ended up going over drawn at the bank. Had a massive problem trying to convince the bank not to charge me the fees for going over drawn. Paypal is a very big problem.
What drives me mad is to be able to have a auction style listing you have got to have paypal listed as a payment option or you can't list the item. I got no problem with being paid for the item through paypal but I will never allow the seller to take the item away untill the money in my paypal is off hold and transferred to my bank, this is why I state cash on collection only.
What a pain in the neck! :/