Refunded a buyer on ebay and not sending an item. Ok?

So I was selling an iPhone on ebay and someone told me they wanted to give me £230 for it and I said ok and have now received the money and agreed to send it to them. When I ended the item early, it ended it as "sold" to the highest bidder and then opened a case to cancel it. I also sent a message to the person saying not to pay for it and if they do I will refund it as I'm not able to sell it to them. They sent payment anyway (I assume they hadn't read anything as it was pretty fast) so I refunded them and they got their money back, I then emailed them saying that I have refunded them and not to pay again as I'm not able to sell it to them as I have sold it to someone else. Is this ok?

Its ok, but expect negative feedback.

Yes its ok but the guy who paid you will be very angry that you pulled a fast one on him and will leave you very bad feedback.

It's not really, "ok", because you put the item on auction, and others bid in good faith that you were looking to sell the phone. You decided not to go through with the sale, and tried to make it fair by giving back the money, but as a business transaction you did not keep your word. If you have any future plans to sell via eBay, you will gain a bad business reputation fast if you continue to be unreliable to your customers. If this is a one time inconsistency, your positive interactions will out way the negative and you can continue to do business, but you will have to be reliable from now on to build a positive reputation.