PayPal IS great... for many things. And thank you for asking what Flattr does better.... I've added a section to my page, as no doubt others have, or will, wonder(ed).
But PayPal takes 30 cents from any gift, plus a percent. (Except if the sender is sending from a bank account... and how many do?)
More importantly, if you invite people to $upport you, $how appreciation, via PayPal, you are also inviting them to go to the trouble of logging into their PayPal account, etc, etc.
To give money to a Flattr account holder, you just click the Flattr button (assuming you have set up a Flattr account... easy, and a "one off" chore.) It is a little bit like giving a site a Facebook "Like". And you can give really small amounts.... say 25 cents! Not a lot, and certainly too little to warrant signing into your PayPal account to do... but a little thank you for a helpful blog post, etc, is something that maybe people would ACTUALLY DO, as opposed to "planning to get around to someday". And if enough people contribited even 25 cents each, the reward to the poster might add up?
Yes, Flattr takes some money too... but not a flat rate + percent on each transaction. They fund their operations by taking 10% of anything you transfer to your Flattr account from the outside world. Seem like a lot? Well, maybe it is... and maybe it will come down, if they can get some scale, and reap the economies? And even if it doesn't, isn't it worth it for the simple and useful service provided?
Neither Flattr nor PayPal... nor a credit card is the way to make large donations to worthy causes. But for little "atta boys", I think Flattr is worth giving some support, to see where it can go.