GoDaddy doesnt allow you to pay with a paypal account that does not have a CC on file. The reason being is that in the event that there is a chargeback or paypal is unable to secure funds from a bank account, there is no backup funding source to go after. Its simply done to eliminate risk of not getting paid. Pain in the booty, but considering the markup on domains is so small, it doesnt suprise me that they are so strict about it.
Justin