its a scam. one way to check on these it to check the link on the email and see where it really goes. it can say it links to paypal.com, but if you check the actual link, its probably some IP address of the choad that's trying to pull this off.
yeah, I went to paypals site right after I posted this and repoted the email. hopefully they can do something about this. The weird thing is I just heard something on the radio yesterday about paypal fraud, and then this email came this morning.
They like to know and will generally crack down on the offenders but they popup every couple weeks. I get similar ones from ebay, yahoo, etc. Now I just delete them.