I pulled this off of a paypal help screen:

Any credit card payment will be held as "Unclaimed" until the recipient accepts it by upgrading to a Business or Premier account, or denies it (if payment is denied, the funds will be returned to the sender's PayPal account).

I've sent people credit card payments by mistake a couple of times and it showed in my account as unclaimed. I believe that seller gets an email from paypal that gives them the option to refuse the payment. Until the seller does that, I think the money is in limbo. I know the buyer can't cancel except in these 2 cases (again from the paypal site):

The following 'Unclaimed' payments may be cancelled:
* You sent your payment to an email address the recipient has not yet added to his account. Once the recipient adds the email address to his PayPal account, the payment will be automatically credited to his balance
* The recipient has not yet confirmed his email address. For security reasons, PayPal can only credit payments sent to a confirmed email address