Craigslist at one point had a header at the top of every page with a warning to beware of scammers and a link describing exactly the scam you describe, did they take that down?

Personally, I got the same scam back in '05 or so while selling some car parts (don't sell a lot there, otherwise I'm sure I'd have other stories) but we played with them a bit. The money order sent was obviously fake, never even tried to cash it.