A few weeks ago, An Update to the PayPal App was confirmed which would allow you to capture (front and back side) photographs of your check to deposit it instantly and that update has been released a few while earlier.
From the app’s official page:
Use the PayPal app to send money to your friends and family, add a check to your PayPal account, and lots more. It’s faster and easier than going to the ATM, writing checks, or sending gifts the traditional way. You can even use it to manage your PayPal account – anytime, anywhere.
• Easily send cash gifts, collect money for a group gift, or repay a friend.
• Have fun and use the “Bump” feature to exchange contacts or send money.
• Give back and donate to a charity, you can also post it on Facebook.
• Stay connected with your money. Check your PayPal balance, withdraw funds, request money, and more.
Don’t have a PayPal account? It’s quick, easy, and free to sign up for one at paypal.com.
What’s New in Version 2.7
• Check capture lets you snap a photo of a check and the amount gets added to your PayPal account
• History improvements make it easier to find past transactions with new search and filter options
But the App has limited the maximum deposit to 1000$ per check and $3,000 per month which means that it wont totally replace check-depositing, So for larger deposits you still have to go to the bank. Just to let you know that PayPal has limited this and its nothing to do with the app.
Also do make sure that you get the latest PayPal App Version for your iPhone. Download PayPal for iPhone, iPod touch and iPad [iTunes Link]