Just traded bitcoins for paypal on spendbitcoins.com . Was very satisfied and will do it again no problem. did it last night there was an issue and jeremy fixed it immediately . Excellent service. No more getting ripped off on ebay selling bitcoins as long as this service is up and running.
Cashing out through SpendBitcoins costs the 2.9% + $0.30 though, which is fantastic if there's no other option where you can cash out without worrying about getting scammed.
To avoid that fee though you might also want to consider trading on the #bitcoin-otc marketplace. There are often buyers who would like to pay using PayPal and have a trust history rating on the #bitcoin-otc Web of Trust (WoT). Often the rates offered are 1:1 versus market MTGUSD or at the current market price.
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http://www.bitcoin-otc.com -
http://webchat.freenode.net/?channels=#bitcoin-otc-foyer -
http://bitcoin-otc.com/trust.php