Basically this happens when Paypal have processed the payment as an instant payment, as the buyer has a credit card back up on file, but when Paypal try to withdraw the money from the bank the bank notifies them that there may be insufficient funds available or the credit card is not valid.

It is very frustrating as firstly Paypal notify the seller it is safe to post but then they advise the seller not to post.

Sometimes these sort themselves out within a few days but more often than not the payment doesn't clear. If you are able to provide proof of postage then if you upload that into Paypal you are covered under Seller Protection.

If you not covered by Seller Protection and the payment is cancelled you will have to ask the buyer to pay again (bank deposit would be the best option in this case).