It appears that Paypal has added a number of hidden fields that need to be specified for your plugin to work.
At Stupid WordPress Tricks, I installed Patrick's Paypal Donate Widget on the sidebar. I think it works on my site - at least you get the Paypal information filled in. If you do a "View Source" and scroll down to where the generated HTML for the Donate plugin is, you'll see the following hidden fields:
cmd, business, item_name, item_number, notify_url, no_shipping, return, no_note, currency_code, tax, bn, on0, on1
Sounds like Paypal expects these hidden fields.