I'm sure I saw this here before, but can't find the thread. I think I'm having a low-brain-function day.   
PayPal had a warning popup box saying that you had to say (because of EU regulations) whether you were a personal, sole trader or business user and that had to be confirmed by Jan 6th.
I wasn't sure whether I was a sole trader or personal, as I use it for my iStock payments.
When I ticked 'sole trader', I could then only have some sort of commercial facility on PayPal, which I don't need.
When I ticked 'personal', it was OK until yesterday when my account was blocked and I can only unblock it by being a sole trader or business user. I guess it was blocked as I get pay-ins from iStock, which prevents me from being a personal user.
I contacted them via their online form. (I hate companies which do that, as I keep forgetting to take a screendump of what I wrote.). Anyway, their reply came in, with a lot of proforma stuff about what to do if I'd forgotten my login details, which I haven't, and nothing about the sole trader issue. I replied to that via their 'reply to this email' facility, but haven't had a reply yet.
Have other EU iStockers who are paid via PayPal ticked as sole traders (those who aren't businesses)? I just feel that by forcing 'sole traders' into the 'business' side of PayPal, they're going to make a charge for that down the road - for facilities I don't foresee any need for. Bad enough the currency conversion charges!

no popup box here

I read about it first here (or maybe on the iStock forum?) ages ago, and I didn't have the pop-up at that time, so didn't pay much attetion, then I had it for about four weeks until I chose 'personal', but now my account is blocked. (I got an email about the blocking yesterday, which was the date in the pop-up, saying I could contact them for help, which was wen I got the 'forgotten your login details' reply.

The email said:
We need your help resolving an issue with your PayPal account.
What's the problem?
Please provide the necessary information by 20/02/2012. If we don't receive
the information in time, we are required by law to limit access to your
account. When PayPal limits an account, your funds may be held until we've
confirmed your identification as per the User Agreement.
Reference Number:xxxxx

How you can help
It's usually quite straightforward to take care of these things. Most of
the time, we just need some more information about your account or latest
transactions.
Please log in to your account and go to the Resolution Centre to find out
what you need to do. If we don't hear from you by 20/02/2012, we may limit
what you can do with your account until the issue is resolved.

'Confirmed your identification' is wrong: I did that ages ago; and now when I go to the Resolution Centre it's going on about the personal/sole trader/business distinction. They also appear to have blocked my account, giving me the same message: I have to choose personal, sole trader or business. It won't let me choose 'personal', and 'sole trader' forces me into a PayPal business account.

Another reason to expedite my tax return, then. 
It's nearly ready, just have to scan some of the paperwork then good to go (I hope!)

I meant the year end accounts - not the tax return.

I'm not a company so don't have year end accounts, only a tax return.

I had to go through the same process. I ticked 'sole trader' since that's my tax status at HMRC.

I only use PayPal to collect my iStock earnings and pay for the odd thing online and it hasn't made any difference or attracted any extra charges as far as I can tell.

Did ticking 'sole trader' not push you into their business accounts?

Hmmm, this is what I get (two separate screens, joined here:

In the top screen (1, above the red line) I choose 'sole trader' and tick 'Yes, this is correct', I get taken to Screen 2 (below the red line) inviting me to upgrade to a business account.
Since I don't currently need any of these facilities, I chose 'cancel', which takes me back to screen 1.
But if I choose 'individual', I'm blocked.

I don't want to get a business account, as I'm sure they'll start charging for it soon. Why wouldn't they?

I also had this pop up... (only on one of my 2 accounts though), i ticked individual because that's what i thought i am. I had SS and DT payments coming in after that, no problems here...
I'd also call them if i were you, afaik they have callcenters in each country...

I think I chose Premier when I set it up, which seems to me to be the best option.  I haven't had any kind of pop-up as you describe, Sue.  I assumed that 'business' was for people trading wares directly with buyers.

I can't see 'Sole Trader', not sure why.  

The differences are listed here, if it helps at all.

(ETA:  Link doesn't go where it should, so have copy/pasted)

Personal:
Recommended for individuals who shop and pay online, or wish to send or receive personal payments for shared expenses such as splitting of dinner bills or rental charges.

Premier:
Recommended for casual sellers or non-businesses who wish to get paid online, and who also make online purchases.

Business:
Recommended for merchants who operate under a company/group name. It offers additional features to help you manage your online transactions.

I believe in the past the cost of transaction was the cheapest for "Personal" accounts, for any other PayPal was charging more. However I didn't check that lately, it could have changed.

Money from royalties is always business. If you claim your Paypal-account personal you may in trouble if checked. At the German Paypal-accounts this question was asked a few months ago, there is no problem to be honest you won't be charged for anything. Of course you should declare your royalties at the tax-office but I guess everyone here does anyway.