I second this. Documentation and Plugin needs updating. Under IPN on Paypal Payments Standard Gateway, it says:
IPN (instant payment notification) will automatically update your sales logs to 'Accepted payment' when a customers payment is successful. For IPN to work you also need to have IPN turned on in your Paypal settings. If it is not turned on, the sales sill remain as 'Order Pending' status until manually changed. It is highly recommend using IPN, especially if you are selling digital products.
Which is the opposite of what misulicus said above. Also, as hommealone said, the documentation needs updating here:
http://docs.getshopped.org/documentation/paypal-payments-standard/
I still can't get the automatic IPN to work for me - the transactions go through in paypal properly, but the status isn't updated in wp-ecommerce. Thoughts? The only thing I can think of is that the checkout pages are currently passworded - would that prevent the IPN from coming back?
-Jonas