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no paypal passwords are saved on steam, that works the same as openid authentication. f.e. login into websites via steam or facebook etc.
It looks like I did check the " would like to link your Steam and Paypal for easier future purchases " box after buying a game. I just didn't know about this change. Very convenient though since my Steam account ist safe.
Found this thread on google, seems like it's been happening for a while:
http://steamcommunity.com/discussions/forum/1/540743757399014979/
I'm guessing there's some checkbox some people aren't noticing either in Steam or in the PayPal checkout when you make a purchase that pre-authorises your Steam account for all future payments. Needless to say I'm going to revoke that permission in my PayPal account right away. On the one hand it's convenient, OTOH it seems like too much of a security risk. I don't even link my eBay acc't to my PayPal, despite the fact that it's the same company--I always log in to PP to make a payment.
And in paypal delete the entry of steam as connected shop.