Hi Kris,
I talked about the need for a PayPal version of Bitcoin in a post/eBook I did called
How to Grow Bitcoin. I'll touch on the key points.
A simple person-to-person pay service I think will come about naturally, and is essential. The root network/blockchain is NOT how the majority of transactions should take place. It's too cumbersome, slow, and won't scale to handle the majority of transactions for the world anyway. Transactions should be done by updating the rows of a database somewhere. Simple.
Such a service should look and behave pretty much exactly like PayPal, except be for Bitcoin. Anyone with an email address can send payment to anyone else with an email address. They log in, enter the address to send to, and the transfer happens instantly. Simple.
Depositing money into a user's "BitPal" type account is done by the blockchain, as are withdrawals. Other deposit/withdrawal options such as integration with exchanges like Mt.Gox can exist for convenience too. But withdrawals and deposits won't happen often because the majority of the Bitcoin ecosystem uses "BitPal" for transactions.
Two more crucial points: all transfers are completely free. Profit can instead come from premium services such as merchant features, and or advertising. Also, such a service is NOT a
bank, and might limit number of bitcoins stored to say 1,000, simply to keep things simple, secure, and focused on transactions.
I think WalleBit could become this type of service. I'm sure such a system will come about at some point either way. I had even considered the undertaking myself, to ensure it comes about.
