eBay + paypal is the same as iPod + iTunes. People want easy simple methods of getting what they want, and their willing to pay for simplicity.
eBay and iPods are already well into the self sustaining phase, where customer recommendations and free publicity automatically garentee a flow of new customers.
Although customers complain, for the majority its still cheaper than most and its still far more convenient. E.g i just brought something new at 1/4 the price compared to shops, in about 8 clicks. Just getting to the shop would automatically be higher than delivery charges.