I've had 2 bad experiences on ebay.
Firstly, I got flogged a fake Sandisk 2gb CF ex3 for £10. Tried to contact the buyer, made a dispute with eBay, and I still have the card sat on my desk. It cost too little and was too much hassle to send it back, especially since it came from Hong Kong.
Secondly, I saw an auction for a brand new 400d for £240 + £25 p+p body only (this was last summer). I spent days upon days looking at the auction, and decided to buy it. It turns out about 20 other people bought one as well. The funds cleared, but no sign of the camera. A week later, I emailed the seller asking what was going on, and saw negative feedback from several people questioning the seller. I was told by the seller that he was a drop shipper, and that the cameras were coming from a warehouse but the warehouse didn't have them in stock. I was told to wait for a week, so I did. I waited for a week, and no reply. I asked him again, and told him I'd open a dispute with ebay and paypal if he didn't tell me what was going on. I got no reply, and opened the dispute. There was no money in his paypal account to repay me, but luckily paypal gives you up to £250 protection. The seller's paypal account was cancelled, and he was banned from ebay. The seller left me some very snotty negative feedback saying I didn't understand the process of drop shipping and that I was very impatient. Apparently he was ********* around about 20 other people at the same time.
Sorry for the essay!