I've been using eBay for years, and have had several problems. While it's usually pretty easy to determine who's a reliable seller and who's not, even people with good feedback can rip you off. I've only had one really bad experience. I sent a seller a money order and never heard from him again. I reported him to eBay (others seemed to have reported him too), and he was banned. I've been very picky about who I deal with ever since.
I've had some other problems. Once someone was selling a sealed copy of a game, he had good feedback and a photo of the item (it wasn't a stock photo). When I got it, it wasn't sealed. I returned it and got my money back.
I was once sent a bootleg game. I returned that too and got my money back.
Outside of checking feedback and reading descriptions carefully, there is one more thing you should keep in mind. Sellers will often over exaggerate the condition of their product. Maybe I'm just picky about condition, but even sellers with their 500+ perfect feedback won't be totally honest.
As for selling on eBay, I don't think it's worth the trouble. Too many deadbeat bidders, eBay takes a nice chunk of money from you, and sometimes your auction could end much lower than the same item normally sells for.