The alternative, of course, assuming that there were other bidders, is to refuse to send the phone to this 'winning' bidder (because of the concern regarding address etc) and offer the phone as a 'second chance' to the auction runner-up. I can't see eBay having a problem with this course of action.
Even if you do receive your money via PayPal, there are many, many cases of these payments getting recalled by PayPal. Guess who loses - yes, you.
I live outside the UK and have asked several sellers before I bid if they will post overseas even if they state UK only. I give them a chance to take it or leave it. I would never send a item until I have the money in my hand and would not expect anybody to expect anything else. And as g0slp says I would not use PayPal.