I tried to register a few domains with Godaddy today around 10:30 AM PST, and the option to pay via paypal was totally missing. I went through the process three times, and the paypal button was nowhere to be seen.
I have read that Godaddy will temporarily disable the paypal option if payment attempts start timing out. A message to that effect would be nice on their part, as most people will have no idea what's going on.
Hopefully, this isn't paypal scammers getting the best of the domain industry.