PayPal systems are not as robust as most other financial systems so you should not trust them with anything other than small amounts where it is convenient and you should not pay anyone over the internet without a real name and address.
I believe that the verification system involves them charging a few pence to your account, then you confirm over the internet how much that amount was. Your account should be in your full name although often initials or middle names are not given on plastic cards. I would suggest that you use your full name and dispute any charges that they make in error. As long as you don't use the system for large amounts, it wont be the end of the world if you lose a dispute.