When I first saw PayPerPost.com mentioned on TechCrunch, I thought it was a joke. It had to be. The more I think about it, though, this could be a great service if done right. The key, as Marshall alluded to, is that the bloggers are being paid to evaluate the product with no requirement for positive coverage.
The problem with Google and other ads is that we, as authors, have little control over what is actually displayed. It is contextual (in theory), but it's just an ad with no "approval" on the author's part.
Honest editorial and opinion is much more effective in selling a product that the usual advertising puffery - even if that opinion is not gushing. In fact, when evaluating a product, I usually ignore the good feedback and go straight to the bad reviews. I already have a picture in my mind of how the product may help, so I want to know what's wrong with it.
This all depends on the credibility of the author. If I disclose that I was paid for this particular review, and I'm honest and credible in the review, should it matter that the reason for writing the review was this promise of payment?
The big concern - that the system is easily abused - could be mitigated significantly by a reputation/credibility system. In the long run, those with higher credibility rating would be paid more for their content, while those who have not earned the respect would get less. In a sense, we already have that system, albeit informal. Like juries, the blogosphere is amazing detecting bullshit. And while we can't convict someone, we can vote with our aggregators.
PostBubble says it's not evil, but will be a failure.
Update: I just signed up for an account, for two reasons. First, I wanted to see how it actually worked and what types of opportunities were there. Most are lame and obvious advertising. In fairness, most also have a neutral tone (positive or negative posts are fine), which means we're really paying for links and buzz - which I guess is ok. Second, I wanted to see if it actually worked, and I'm taking the opportunity posted about in the TechCrunch comments since I already wrote about it.
And if I do ever decide to take another PayPerPost.com opportunity, however unlikely, rest assured it will come with the appropriate disclosures.