Thanks for all the replies. What I've done in the past with an individual is sent them a USPS money order in certified mail. That way they have to sign for it, and if they try to rip me off its mail fraud.
Obviously I get all thier info, and they have mine and I verify they are who they say they are. And I always talk to them on the phone, and get all the details in writing (email) and if I get a good feeling... I go for it. I have bought several guns over the last few years like this and never had an issue personally. I didn't know if there was a better way to do it. Figured I'd see how others were handling the transactions. I have also sold some guns the same way, with no issues.
I didn't know paypal had that position, though I've never used that avenue of payment or accepted it (for a gun). Hopefully this thread can help folks that might be buying/selling online. Also, I have bailed on a couple deals that looked really good...but the details on the person and potential transaction seemed shaky.