I don't think anybody has a problem with adding actual costs such as packing materials, tracking, etc to your s&h charges.
What drives me up a wall though is the people (and there are a lot of them) that will list an item at $0.99, and then charge $15-20(!) to ship something that actually costs about $3.00 to ship.
Although I'm not as concerned about EBay not getting as large of a fee for the listing (they're not in any danger of going out of business any time soon), I still find this to be a dishonest way of listing, and I refuse to shop with any of those sellers simply for ethics reasons.