I would like to purchase some cute and unique envelopes and paper for letters to a friend. However, I have checked out the local art stores, etc. and am not impressed with what they have or their prices are too high.

Are there any online stores that sell nice, colored, unique envelopes and ALSO accept Paypal?

www.paperarts.com has awesome paper supplies & accepts paypal. though it's a bit expensive if you want the really swank stuff.