Shouldn't use PayPal but it's just not that simple...
Sure, nobody should be using PayPal for their business needs and if anybody signing up for a business account there actually read the terms and conditions where it basically says they can freeze your funds at any time and for pretty much any reason with very little recourse, then far fewer people would use it.
But...
Punters *love* PayPal. Almost everybody has a buyer's PayPal account, even the people who hate it. Ubiquity plus the fact that customers often expect it from small sellers is a nice little self-reciprocating loop for PayPal. Businesses use it because customers expect it and customers have it because for lots of smaller businesses, it's the only payment option. Add to that the media, which has taught the great unwashed to be afraid of small-time companies asking for CC#'s on the internet and PayPal must be rubbing their hands with glee.
The other problem is lack of cost-effective alternatives for small businesses who may only see a sale or two a week. WorldPay is trusted but is a subscription model (when last I checked, anyway) so your small profit disappears and a lot of the other major payment systems, like Google's have the same 'what's yours is ours' attitude as PayPal as well as being limited to certain currencies. Those that perhaps do act a little more ethically towards their business customers face the problem of being small-time and the customers won't trust them and the sellers end up with an inbox full of "do you take PayPal" emails.
It's no good saying businesses shouldn't use PayPal when the punters expect it and there's no genuine competition that doesn't have exactly the same problems.