You can add a phone number to your account by visiting the profile seciton. On personal accounts you just click the little circle gear icon at the top right when logged in.
Keep in mind that PayPal prefers phones registered under your name. If you use a family plan or someone elses cell plan and need to one day verify your idendity using a phone call you may run into issues if so.
Advice given by paypal is wrong. The error occurs when you are trying to send money to a badly formed email address, for example bob@hotmail, when it should be with a .com at the end of it to make it work, otherwise you get the completely useless phone number error. I suggest you check the email address you are sending to and try agian.
Guru-Choc is correct. I had the same issue, and after seeing his answer I realized the send to email address I had copied and pasted had a space in it.
