I believe that GoDaddy accepts Paypal, or once did accept paypal. GoDaddy has some deals on domain names:
http://www.fatwallet.com/forums/mess...eyword1=domain
I don't know if you'd want to pay for all those other features, though.
I looked up "buy domain paypal" on Google and the following results came up, doubt that they are reliable, though:
http://www.fxdomains.com/
http://www.idotz.net/
http://beyonddomains.com/paypaldomainregistrations.htm