Just as a note, I had BP do some banners for me a few weeks ago. I have nothing but praise for him & the quality of the banners he produced which were excellent.
'Problem' clients are a fact of doing business - whether it's online or offline - but seem to be more common online in my experience. If you do any sort of work online, you're bound to come across them at some point. I often do freelance work locally that is over a grand (weeds out most of the kiddies and idiots looking for a free lunch) but yet I've still had problems with clients wanting more than they agreed to (and signed off on the contract). But on the other hand, I've had plenty of people pay me £100 for a couple of hours work and not caused any fuss at all.
No matter what you do to protect yourself (contract, documentation etc...), you'll still find people trying to get more than they agreed to, and when they don't get it, many know how to kick up a storm. You've just got to move on