You are right it is no better than paypal:
1) No fees
2) Instant
3) No chargebacks
4) Can withdraw to BTS to gain higher yield
5) Gold, Silver, Gas, Diesel accounts...
Someone please correct me if I am wrong, but I believe Paypal to Paypal transfers (assuming you have a balance in your Paypal account already and do not need to move the money in from a bank account or credit card) should also be free and instant.
Technically, nothing stops a hosted service from implementing chargebacks. None of the internal transfers are on-chain so they can roll back as they wish if their customers find that acceptable.
I will give you the point that you can save in Gold, Silver, Gas, etc. That is a unique feature. And the ease at which one can withdraw funds into the blockchain and manage them with a full client is a huge plus as well (although it does require the person to set up and use a full client which could be a bit of an obstacle for someone who was attracted to a hosted service in the first place). Also, to be fair to myself, I did say "not much better than PayPal" not "no better than PayPal".
I still think it is important to not neglect the yield when enticing the masses into our system. Also, I really want to see a blockchain.info style wallet with multisig as soon as possible because I really hate to see people move into hosted wallets where they don't actually have control over their own money. I also worry about what hosted services holding BTS on customer's behalf can do with the voting power in their control.