I am a Pay Pal User for almost 5 years and I totally agree with you. I don`t think that a customer is going to leave your web site just because you are using pay pal... I think that most of all, they ditch your web site because you don`t keep your web site with the 3-click rule which are... Click on the Item, Add to Cart, and Click to buy.
I think host rail is just giving his personal opinion and link to get more visibility but that`s based on his findings and not everyone elses.
Thus, I do agree that getting a professionally developed web design, can really improve your image. Perhaps you should try Zen Cart or Oscommerce as your shopping cart system..
Web Developer / Owner / Consultant
When starting your own business the need to "know-how" is greater than money!