Craigslist is a fairly unfiltered portal into society. It is not based on relationships like facebook, it does not require more extensive seller verification like ebay. It is basically the newspaper classifieds in an online format with only a twinge of technology sprinkled in.

Craigslist is easy to use and the primarily text-driven approach means it is accessible to even users on dial-up connections (and although you might think this rare, I still know people in the US who have no viable high-speed Internet options and are using dial-up).

Fraud is, IMO, inherent in society. Manipulative and creative people have been taking advantage of trusting or less educated people since man first implemented a monetary instrument.

I think part of the make-a-better-Craigslist camp is similar to some of the confusion around the mint.com sale... Not everybody has the same motivations... I don't think Craigslist wants to be the best/safest/most-diverse online classifieds system. I think they want to be the easiest, simplest, I-can-go-home-at-night-and-not-be-bothered online classifieds system. There are many things they could do to be "better", but I don't believe the cost and complexity is worth the impact on the lives of the employees and the business overall.

There is a market opportunity for an improved Craigslist, but it's a little bit of an end-of-the-rainbow pursuit.