I have been on both sides of this issue. I bought a subwoofer that was shoddily packed and arrived damaged and unusable. The seller claimed that I was responsible for getting money from UPS, not him. I fully documented the unpacking and the damage and opened a dispute. Although PayPal initially denied my claim (!), I continued to push them with more pictures and they ruled in my favor. The whole process did not take more than a month.
On the other side, I sold a sub, and had it professionally packed by the company that I have always used in the past. They apparently did a lousy job and it arrived working fine but with some very minor cosmetic damage to one corner. I had insured it for full value with Fed-X, and spoke with the buyer about what he would like to do. I offered to have fed-x pick it up, or leave it with him and give him the money that I got from Fed-X. Since the sub worked and the damage was minor, he kept it and I got almost all of the money from Fed-X and sent it to him. So he got the sub for about $50 or so and was happy with how it worked out. It was unfortunate that it wasn't packed properly, but it all worked out. When things go wrong, the key is communication. I think that regardless of what side you are on, talking it out reassures everyone that things will be made right. But one thing that people must understand is that the seller is responsible for getting the equipment to the buyer in working order. The seller is responsible for getting it packed properly, and the seller must insure it for its real value or pay the consequences. When things go wrong, the seller must step up.