There is nothing wrong with paid links but when you sell OR buy them to either deceive your guests or (more importantly for Google) spiders than it's wrong and should be punished. Google's job is to find the best results for it's customers, if people are deceiving their guests into believing a page is better than what it is then it has a right and duty to do something about it.
P.S. As a computer person it's amazing how "dumb" some people are. I signed up for some of the text link places(curiosity) and within a matter of 15 minutes I could find hundreds of purchased links, if I can do that so can Google(probably faster).
One thing people also forgot is once you're on Google sh*t list it's very hard to get off. Is it worth it to be dropped or "flagged" on the largest search engine for a few dollars or one or two links on a larger site? I think not.