If you sent the item to a different address to the one the buyer has registered on Paypal then you are screwed, if the buyer raises a Paypal dispute then you will lose.
This exact thing happened to me, seller asked me to send it to his company address, someone signed for it and it disappeared. It was a 300 squid item. The buyer raised a case on Paypal, I put my case details forward, stating he requested it to be sent to a different address, I even sent the email the buyer had sent to me, but Paypal DO NOT take emails as evidence in a case resolution!!! RIDICULOUS I know.
I simply do not use Paypal or Ebay anymore, apart form the rip off selling fees and Paypal fees the cover is actually worthless.
Has he raised a Paypal dispute? If not, close your Paypal account and run. If he has raised a case, then obviously your account will be negative the sale amount. Its tough to get around that other than refusing to pay the negative balance. But Paypal do pass debt above a certain amount to Debt Collection agencies, either way its shit.
Only thing you could do, I know this has worked in the past, is raise a small claims court case against Paypal. Taking an email as evidence etc to a case like that would almost certainly obtain a resolution form Paypal, they would want cases like this being made public.