Increasing the price of an item to compensate for potential credit card charges will work on something that has a fixed cost/price, such as the items sold by the retail businesses listed in the prior post. I don't see how increasing the starting bid would accomplish the same thing for most auctions. I understand that if the auction has only 1 bidder (or "maybe" 2) then a starting bid of $11.99 instead of $9.99 would cover the fee (or what ever it takes).
Put another way - Two different auctions:
#1) Has a starting price of $9.99 but doesn't accept Paypal. Closing price $100.
#2) Has a starting price of $11.99 but does accept Paypal. Closing price is $100.
However you slice it, seller #1 made more money because they don't have a Paypal fee. Now, #2 will probably get more bids, at least he'll get mine, and his cash flow is better (if that's important).
I'm like most everyone else - I won't do a money order unless it's something very rare, but that's very rare.