I don't think that is true anymore. The classic "GmbH" was comparatively expensive, but I think they now made a cheaper version. Also, you can choose any other "company model" from any other european country, british Ltd. being the most popular. I haven't founded myself yet, though, so I can't say for sure...

paperwork: I think once you have a business, your tax declaration becomes more complicated, you might be obliged to have a professional tax advisor. What else is there to do/pay?