I have had this happen a lot. If you sent first class with tracking you have 0 insurance unless you paid extra for it. In reality there is nothing that can be done other than hope it turns up. Ebay and paypal will not help you out, but ebay might make you refund the buyer. This is my experience.
I have never lost a package, some just take a long time to get there. I sent Leon $ for a t-shirt and it took 28 or 29 days to get there but it finaly did. For me the big thing is communication with the person who is supposed to get the package. Hope it shows up for you.
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