That's the point- Bitcoins really don't offer any security against scammers. Paypal has flaws, but bitcoins don't offer leaps and bounds of improvements. Also just noting that due diligence is hard in a younger community like bitcoin merchants. Easy to get into, easy to run with a profit.
Painpal and similar entities not so much "protect" against fraud as shift the damage to almost exclusively the established merchants (since scammers run for cash out pretty fast, they hardly care that much, it's basically them vs. time after you send them a Paypal transfer, and with proper skills and prep, they easily outrun an average person's ability to realize the fact of fraud and file complaints), which strikes me as somewhat perverse (though I could definitely see how some people might find that setup comforting)
As for due diligence, well, we have #bitcoin-police @ freenode. Do check those guys out ( Google bitcoin police IRC if you don't know what the love Freenode is)
This is another thing. Inflation is a constant thing. It always has been, and without artifical devaluation of currency, it always will be. Without regulatory bodies presiding over bitcoin to artificially control values (which we all know will never happen), then once the limit of 21 million is hit, prices can only go up. It's a system that favors early adopters and wealthy people far too heavily to make me comfortable.
I suspect that deflation does not work like that.
Deflation and different economic schools links can be found here:
https://bitcointalk.org/index.php?topic=11627.0