You did the right thing. The point of escrow is to give you enough time to verify that good funds have arrived.
On PayPal, Dwolla, or other types of deposit you should take it a step further and go get your cash out and hold it in your hands before you release funds.
Otherwise there could be a chargeback up to 180 days later.
Won't help too much I'm afraid. Paypal will come after you should they side against you.
OP, never release until you see the funds. Paypal is quite risky to sellers.