I would look very closely at your Google Analytics as to where you are losing the customers.
But, just to play devil's advocate, the route to purchase still seems a little involved. Once I have clicked the ball and hit proceed, for first use I have to click off to register (big log in button for returning customers, but small text link to register for new customers. Why favour returning customers? It's the new ones you need to convince first), with quite detailed information (address and mobile number) and agreeing to terms & conditions that I cannot access from the register screen - I have to hunt for these, find the link on the top menu, then use the back button to return.
I then have to click away from your site to PayPal in order to pay with another login. I thinks thats 7 clicks after placing the ball.
I would do away with PayPal altogether (I personally will not trust any site that only has PayPal, to easy to set up and disappear, but that's just my personal view), and use a secure payment provider (Paypoint etc), hosted yourself. Then change it so that once you click on the ball and click proceed you are taken to a single screen "checkout".
Take all customers details, including credit card, on the one screen - do not give them a chance to click off (for terms or anything), and simply give them the option to save their details at the end of it (and an equal option to recall them if they have purchased before).
If you streamlined it enough you could get it down to 1 click after the ball.
If you are getting the traffic then any increase in your conversion rate with make a big difference to the bottom line.
All IMHO and all that...
ps Do you have the book "Don't Make Me Think" by Steve Krug? It is old, but an absolute bible when it comes to things like this.