Like they said, live and learn.
Proper thing to do would have been to refund the payment immediately upon receiving the dispute, and then consult with the buyer about why she did it, assure her that you will send it ASAP and provide tracking/DC# afterward, and then have her re-send the payment to you.
If I were you, at this point, I would request her contact information and wait for the package to arrive. If the package is empty, you have 2 options. You can contact PayPal resoultions (always ask for a Senior Agent, the other guys are idiots and can't do anything). Tell them about your situation and ask them to send a threatening email about having her actually return the package. They can do that. And if you need to, repeat as necessary.
I would also contact her directly via email and phone, and use some emotional tactics to guilt her into returning the item. Depending on how much the item cost, you could say the money was for rent, etc. etc., whatever you have to do. Don't get angry, it'll only make her not want to send the item back. Even offer to pay her for the return shipping after you receive it back, if it was an expensive item.
If it was a cheap item, just learn your lesson (or try the above anyway).
-N
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