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The police probably won't do anything about it. Between the small size of the transaction and the fact that it was online they'd probably consider it a waste of their time. Besides, you gave him the money, which sort of removes theft from the equation; in any case you're more likely to be referred to a small claims court which almost certainly isn't worth your time.
I'd just let the paypal dispute go through and hope it gets resolved that way. In the meantime, if you have his phone number you can harass him into coughing up; that works for me when I'm dealing with someone that has to answer their phone, i.e. someone reasonably reputable that can't just turn off their phone or change their number.
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