You can't topup you giffgaff account using PayPal, but once you've earnt some giffgaff points, either by answering questions on the forum, or referring your friends to giffgaff, you can have the points value either as call credit, or paid into your PayPal account.
There is a possible workaround for this though,
You can't top up with paypal on the giffgaff site BUT you can buy an o2 top up voucher via paypal.
There are plenty of online companies that will email (or text) you a voucher code to top up with for the main phone companies (o2, orange etc.) and most of these voucher companies accept paypal.
Seeing as it seems that o2 vouchers can be used with giffgaff, perhaps this would be an acceptable solution for you?
I can't vouch for this company as i've yet to use them... http://www.topupsdirect.com/index.html
but they are one of many who offer such a service & accept paypal as payment.
But if you google "paypal o2 top up" i'm sure you can find plenty more who do it... there are a lot of ebay sellers who do the same too.
Hope that helps.
Ah interesting, I'd not seen that.
I do know that there are others offering the same service on ebay without these charges.
Still, I guess these companies have to make a profit somehow... and perhaps makes it clear to the community the costinvolved in implementing a paypal solution would be to giffgaff.
Still, it may not be ideal, but it is a solution for those who have limited options and are willing to cover the paypal fees themselves.
Thanks for the additional information though