DO NOT contact the seller and refuse to pay!! You're risking an immediate neg that way. Here's what you do. Follow this link. Report the item, stall the seller and tell 'em you're having problems with PayPal, etc. It'll take a few days, but Ebay will cancel the auction and send you an Email that you're not obligated to complete the transaction. Done!
i'm going to report it, too -- multiple reports might ensure that it's pulled.