I heard paypal does this as a form of "verification of physical address"....guessing if you dont pick it up or whatever, they will shut your account down. Heard they do this when they have been "tipped off" somehow of a possible misinformation or frequent paypal/ebay problems associated with you. Yeah, fedex is expensive, but I am sure Paypal has a pretty good deal with them that makes it cheaper than UPS or USPS. I personally would let them shut the account down and move on....wouldnt put my "Jimmy Handcock" on any damn thing that had to do with ebay/paypal stealth.
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