This happened to me as a seller.
I sold a game boy and ovver $700 in games and accessorys.
the buyer got it for $110.00

I offered registered post, the buyer declined so was sent regular.
the parcel never arrived, i spent over amonth ringing around aus post to find it but because it wasnt registered i had no luck - they said if it is found it will be destroyed as dead mail and not resent.

Anyhow the buyer put in a dispute, all though i had a receipt for the bag - i couldnt prove it was the bag i put the items in, and they got the money back. i had to pay it back and all the fees too.

Plus i will never know if they were dodgy and kept my money and the items.

So if you put in a dispute and the seller cant prove through a registered no. the item was sent paypal will send out debt collectors to the seller and recover the money and you will get it instantly refunded.

I learnt the hard way with registered post and only use it now when sending in case this happens to me again.

it is up to you what you want to do.