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I use a paypal donation button to collect money for banner ads and it works well....I use a custom designed button and not the paypal default so I don't know if that makes a difference in it's perception or not???
Maybe a scratchback widget might be better received? There is something given in return to people that use it...a link or banner ad. Just my 2c :)
I had a donation button up forever when I had my bloggingcents.com going. People were donating and thanking me for the help I gave them or for providing such informative posts. I think I made around $600 one year from donations.
Do I use them now? No, but it's only because I don't need to. I have been lucky enough to generate enough money that I don't feel I have to do it but if I was a new blogger, or struggling blogger, I would definitely put one up.