PayPal is good if you don't want the hassle of dealing with credit card numbers and the real meat of the credit card processing business because PayPal does it for you. All you have to worry about is giving a link to your customers to pay you via PayPal and you have the cash. The big disadvantage of PayPal is lack of control; they can hold your cash at anytime and big as they are it can be a while before you get it sorted out. Additionally you are very limited as far as how much you can customize the payment page. Now with the paypal api I think you have more control than when I used em.

Now lets talk about the real cc processing setup. It involves three parties: merchant, gateway, signing bank. Usually, when you signup with a merchant they will set you up with the bank they have a deal with so you can accept credit cards. The gateway is authorize.net. Authorize.net will be the interface between your customer's CC info and the bank that actually does the transaction.

Ideally for long-term you'd want to use a real merchant. But for starters, paypal should be a good option for you.