Will make the story short as not to bore u

Hi i sold a ps3 to someone using paypal thru ebay, sent it off and it got lost in the post. I have been in costant contact with the buyer stating how sorry i was that the item got lost.
He has been to post office i have been to mine to see if it had been returned, no sign?
I send him reciept as proff that i posted it incase he thought otherwise, to which he replies oh thats my old address? Iask whether he can go round there so he does, says no sign and asks if i can check my post office.
I do and still no sign, ask for claim/loss form fill it in and have sent it off.
Now he as opened a dispute and asking for money back? I said im sorry but not sure how i can send money back as i dont believe it to be my fault and ill let paypal sort it out?
So have sent off the dispute to ebay stating that i dont think its fair i have to give money back, im not a comany so dont have any refund policy etc??

So just wanted to ask u guys what u think and where i stand?
Thanks guys
p.s. i have 100% feedback and have sent off hundreds of things even on here and nothing has ever been lost all from the same post office. SO bit annoyed tbh.