book called Happy About Website Payments with PayPal
I've used paypal since before it was paypal. Originally it was x.com and offered checking accounts, of which I had one. Out of all the people I know who use paypal, only 1 has ever had their account limited, and that was resolved immediately, and it was due to that persons error.
I'm sure that there are a lot of people who have complaints, but frankly, I have had more issues with banks making errors then I ever had with paypal.
Suggestions to limit your exposure are to keep a low balance in your pp account, and transfer regularly to your bank, or get a pp debit card and withdraw the money.
I have a merchant account as well, but it seems more people prefer to pay with paypal then any other form, and so long as they do, I'm not willing to turn away their business.