I get more than a hundred Paypal transactions for every check/money order... So yes. You pretty much have to have an online payment option or else you are forgoing 99% of your business.
Google Checkout and Amazon Payments work as well, with roughly the same fees.
My personal rules regarding my Paypal account are
1) My e-mail passwords and my Paypal password are completely different. Not just changing around letters and numbers, I actually use different password schemes for my mail accounts. Recently I've also taken up Password Safe, but there are a number of password keeping utilities you can use.
2) Never, ever click a link to Paypal in an e-mail. These are often composed of very involved phishing scams.
3) Always use a browser that supports EV certificates when using Paypal. These include IE 8, Firefox 3, Chrome/Safari 5, Opera 10-11, etc. Any modern browser. Double check that you are actually at their page and using ssl (https) before ever logging in.
4) Only use Paypal from machines that you and only you have access to, and keep your machines clean.
5) This same policy applies no matter your payment processor. Google Checkout or Amazon Payments - keep the same level of paranoia.
As far as doing good by Paypal, you can set it up so that you have to actually accept the money manually, so that you have time to research your prospective client for fraud. They should be pretty up front about who they are without dealing in funny business.
They're not without horror stories, although the occasional horror story author does not have clean hands, either. I certainly would prefer a better option, myself, but if you're both taking and spending money through them they'll consider you a very valued customer and treat you accordingly.