It's just an online computer game. It's free to play, but some expansions cost a few dollars. It's really no different than buying a video game or buying expansion packs for the SIMS or what not.
I like it because it's a mindless game thing to do to get my mind off of a stressful day at work.
i have never bought farm cash, but if you're worried about the transaction, you can buy farm cash cards at anywhere that carries gift cards, and just type in the code on the gift card.
Yes, I have purchased FV cash with no problems. I used paypal.
Yes, you can buy fake dollars with real dollars. You don't have to as you can play the game without spending a dime and you can earn the FV $$ through game play, although at an excruciatingly slow speed. So, if you want to speed up your stash, you can purchase some extra.
I allowed myself a set amount for what I thought the game was worth. Since the game is free to play, I find it no different than paying $70.00 for some video games or paying monthly just to be able to shoot people in WOW (which I don't play.)
I spent $30.00 on FV cash and maxed out Farmville (level 70) in less than 6 months. So, to me, $29.99 is what I felt a game of that complexity and time value (I played about 30 minutes a day) was worth.