(This in regards to Germany, not sure if there's differences across countries)
If the buyer claims to not have received the package, seller must prove to Paypal that it's been sent. Without registered shipping this is impossible and Paypal will refund buyer at seller's expense. As an official seller it's advisable to ship registered to buyers who aren't trustworthy. As private seller it doesn't matter since Paypal for friends payments can't be claimed back anyways, so buyer should specifically request registered shipping in case private seller isn't trustworthy.
Damage to package is shipping company responsibility. As there's good chance that items inside are damaged too, buyer should not accept the damaged package without filing a claim with the delivery service before signing it and then work with the seller to clarify responsibilites. In my experience this is just bad luck and rarely happens. If a package is severely damaged and the delivery guy refuses to record the incident, I as buyer would not accept the package and have it sent back.
Damage to items without visible outside damage on packaging is always seller responsibility as they have to ensure all items are protected from rough handling by delivery service. However, it is very hard to prove for the buyer that items were indeed damaged due to poor packaging. I've had buyers deliberately damage items after receiving them just to try to get refunded (very few cases and no people I work with regularly). At least in Germany, this does not work since Paypal is not a law court institution who could decide those matters based on hearsay. So what they do sometimes - because they're making shittons of money from fees anyways - is to refund both buyer and seller to make them "happy" and keep them hooked to Paypal as it's so "easy to use".
So yeah, I agree, Paypal mostly decides in benefit of the buyer which is not surprising as they are paying the fees. If you as seller read a bit about local consumer laws, you will have a better stance with outrageous refund disputes. Paypal is not above the law. I hate it, and I always encourage EU buyers to use bank transfer if feasible as it's almost just as quick if you use online banking. Most buyers want it the "easy" Paypal way despite the fees, but I'm not convinced that companies who want you to get rid of your money more and more easily and quickly have your best interests in mind.
