I would contact Paypal...and a lawyer.  You at 
least have the right to get your money back.  I 
also had this happen a long time ago.  I had the 
perfect Tamahome cel coming from Japan.  I had 
been looking for a cel of him for over a year, 
and this one was just awesome.  I paid about 500$ 
for the cel....and low and behold, they say 
they "lost" it in their shop.  That's the biggest 
BS load I've heard.  I was able to get my money 
back thanks to the fine people at Celga, whome I 
owe a gracious thanks to. They also informed me 
that this particular shop is well known for bad 
business.  Id be happy to tell anyone the name of 
the shop too, but they're not too well circulated