Perhaps you could apologise to the buyer for the inconvenience, state that it's on its way back to you as far as you can tell from the tracking, and suggest that once it arrives back with you then you'll contact him/her with a view to organising a mutually convenient date for collection of the item? If the buyer is willing to travel to you in order to collect the item in person then you won't have to worry about the item getting lost/delayed in transit and you won't lose the sale.
If you do decide to offer the buyer this option then it would also be worth including a line to the effect of "If, however, you would prefer not to collect the item and would rather cancel the transaction please let me know and I shall issue you with a full refund." If the buyer subsequently responds to your message (keep all messages on eBay relating to the transaction) stating that he/she would rather have a complete refund then just refund the buyer's money in full. You will then be free to relist it for sale again. If it's a large and/or very valuable item that you would not want to get lost in transit, or perhaps something that may be liable to getting broken in transit, then it may well be a good idea to offer Collection In Person on the listing as well as offering various means of postage.
