Been using ebay since around 2000, got a good feedback of over 500 100% positive. Had a few up and downs with numpties, been through their resolution centre thing a few times, but in the main all sorted out reasonably well.
Ebay will offer a reasonable amount of protection. Ditto PayPal - but only for transactions outside of Ebay. If it's an ebay sale, PayPal will insist you go through the ebay protection scheme. Remember this if you negotiate a sale outside of ebay...
If you're buying something and seller won't sell. You complain to ebay, after a 2-3 instances they'll get kicked off.
If you're selling something and buyer won't pay, you go down the non-paying bidder route, takes a few weeks, but eventually ebay will refund you the final sale fees. They do this more than a couple of time and they'll be kicked off.
Always post stuff with insurance and proof of postage, signed for. Only post to a PayPal confirmed address, not some random other place the buyer requests. If the buyer claims it doesn't turn up, ebay will want to see proof it was posted and signed for. Especially true for buyer collects! Always accept cash only in this instance.
If something is trashed in the post, it's up to the seller to provide a refund and claim on the postal insurance used. However they can insist on the the buyer returning the item first for inspection.
Agreed, the protection is biased somewhat to buyers, and ebay/PayPal will take a hefty sum in fees, but ultimately stuff does sell better and for more money on there. So long as you play their game, it is still generally the best way to go with flogging stuff.