How about a PayPal button with the other links (faq, tmi, etc) at the bottom of the page? I think tying in a page or window with a suggested (and justified) donation amount would be helpful. I know I would personally be more likely to donate if it was a simple button and there was a suggested amount with some reasoning behind it. If this amount is on the larger side it may help to split it into more modest monthly donations for those who would prefer that option. As for incentives, I personally wouldn't care for any, but it may help sweeten the deal for some folks.
Not paypal. They'll fuck you over as soon as you start generating revenue. Generate enough money and they'll claim you're "not a non-profit," disable your account, and take the money without a way to appeal the decision. They've done it before.