Yes, you will still need to report that income. If you are selling products or providing services and receiving payment through PayPal with the intention of making money, you are considered to be self-employed and should be tracking your income and expenses.
If you make more than $400 from self-employment income then you need to file a return.
If you already have to file a return, you need to report that income regardless of how much you make.
If you are selling products or providing a service for pure pleasure without the intention of making money, then it would be considered a hobby. Even if it is a hobby, you still need to track and report your income. The only difference is, it is not subject to self-employment tax only regular income tax.
PayPal and other corporations have reporting requirements they must follow. Their reporting requirements have no impact on those who use PayPal to receive payments.
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