I think Bitcoin has the potential to overwhelm paypal but there are two things I'm not sure about Bitcoin that are unstable prices and too long transaction time.
Too long transaction times are already a non-issue when accepting zero-confirmation payments.
That might be correct though a business like that might not last that long because there's a bunch of people that are dwelling on the Internet looking for something that they can get for free.
Double-spending transactions would be an issue for Bitcoin for that case so that type of thing has its good and bad side.