Better for paypal, not the victims. To be clear: I don't support their actions, but I think its easier to correct them if we don't moralize for a bit and look at the incentives they're responding to.

There isn't a good solution for people who have their funds frozen that I'm aware of. :(

You can mitigate your risk ever so slightly by being setup to be able to accept bitcoin: it won't get back seized funds but it can make a blockade by commercial actors even coordinated ones less damaging, but how viable that is depends a lot on the nature of your business and it certainly isn't without it's own problems.

I wonder if any insurance policies for small businesses might cover account seizures?