Bought a bike off Craigslist this summer. My first time, my first road bike. Seller seemed honest and personable. Got the bike home, went for a ride, and noticed the head tube was cracked. In two places. Ugh. This was a known (not to me) issue for this particular model of bike. I was very fortunate to be able to resolve the issue through the manufacturer, despite not being the original owner. (And I'll forever be loyal to Terry Cycles because of it.) Then, discovered that the master cyclometer was mysteriously stuck at 700 miles. The owner of my LBS laughed when I asked him if the bike had 700 miles on it.

The seller was very cooperative, and we ultimately renegotiated the price of the bike. My lessons for next time:

1) Google bike and year for any known problems prior to seeing it.
2) Thoroughly inspect the frame for any defects. (Seems like a no-brainer, but in my delight at finding the bike, I didn't.)
3) Consider the benefits of paying with PayPal. Their dispute resolution service was worth the extra cost (3% surcharge to seller, which I paid), at least to me in this particular instance.

I know of many people who have had positive experiences, and I think my mistakes were entirely due to my own naivety and general bad luck. Lesson learned, and shared.