Namecheap is definetly an excellent provider for .co.uk I have been using them for 2 years now paying via paypal no problems whatsoever. I have a few .co.uk domains with them, highly recommended.
I can personally vouch for Namecheap, Domainsite, or Registerfly. I do business with all of them and I have been satisfied with their service. All of them accept Paypal though Registerfly seems to be having some issues currently with Paypal.