There is a very simple way on Magento 1.7 to remove the paypal logo from the sidebar without touching php files.
The PayPal section has been moved in Magento 1.7. You can disabled PayPal logo by following below path:
Path:
System > configuration > payment methods > Paypal All in one payments solutions >
Paypal Payments Advanced (includes express checkout) > Basic settings paypal payments advanced > Frontend Expereince settings > Paypal Product Logo
