If lifting the limit is what you want to do, I received the same message from them within PayPal, when I tried to withdraw funds-if I remember correctly, you have a choice-either give them the SS# or (b) which I do not remember. If you received the message the same way I did (going into PayPal from ebay, etc) then you have a choice.
I don't remember what (b) was, but I remember thinking what a hassle or something along those lines. As PayPal is a bank, if you're verified they link to your bank which does have your SS#, I crossed my fingers and thought about it for a day, then went ahead and sent the #. Knock wood, so far so good. I do remember thinking that it was yet another instance of them basically having you over a barrel-