Check this out - seems Paypal has changed their policy regarding adult physical goods - here's what i found in the terms of service search:
How does PayPal determine which sexually oriented goods and services to permit?
Physical Goods ? PayPal allows U.S. only transactions for certain sexually oriented physical goods, such as videos, DVDs, magazines, or other products physically delivered to the customer. PayPal does not permit transactions for sexually oriented physical goods by users outside the U.S. To determine which types of physical goods to permit, PayPal considers these factors:
- Regulations or restrictions on the purchase or sale of the product in the applicable jurisdiction
- Classification of the product by a recognized ratings board
- Description or depiction of sexual conduct in a patently offensive way
- Dominant theme of the material or website
- Literary, artistic, political, or scientific value
- Impact on the safety and protection of PayPal's customers
- Potential medicinal or educational uses
Digital Goods ? PayPal
prohibits all account holders from buying or selling sexually oriented digital goods, including downloadable pictures or videos, subscriptions to websites, or other content delivered through a digital medium.