I sold my unlocked 8GB 3G for $150 (should have held out for more) a couple weeks ago on eBay to a guy in Puerto Rico. He had around 70 positive feedback ratings and paid immediately via PayPal. As long as you're using PayPal, I don't really think you need a separate escrow service. That's essentially what PayPal does, at least for items over a certain $ amount or if you, the seller, has under a certain feedback rating. Mine was 9, FWIW.
When he bought the 3G, he paid immediately and PayPal held the money in escrow, essentially, until he received the phone and made sure it was in good shape. I shipped it through USPS, it was tracked and when I saw that it had been delivered, I sent him a message to ask him if everything was good. He said it was in perfect cosmetic condition and working great. That same day, the money was released to me and I put it in my bank account. Made around $120 after fees.
I was a little worried about the PR thing, but since it's practically a state, I decided to go ahead with the sale. I'm glad I did and everything worked out just fine.
Also, to the folks who are freaking out about meeting people from Craigslist - just meet in a very public location during business hours and you'll be fine. I've sold concert tickets, furniture, an iPhone 4 Bumper

and a few other things this way
and I'm a young woman. Zero problems and no creeps. If you think that this person is going to murder you in public in broad daylight, you have much bigger problems than needing the money from selling your phone.