I can't find an answer anywhere, and I know it wasn't like this before, but does anyone know why, and since when, PayPal started holding funds for service invoices?

I know whenever I sold something (not often) PP would place funds on hold, but I mostly do service transactions and whenever I sent service invoice they didn't hold funds, now all of a sudden they do.. something new?

PayPal does keep changing their policies/software, yet they still seem to be the most reasonable method for taking payment online. Not having to pay transaction fees to each credit card company is a big savings, and I've not found a less expensive method. I never use their billing anyway; perhaps you could consider diversifying your software the same way they keep telling us to do with investments.

I have only sold goods on eBay, where Paypal never held my funds (I pre-dated when they started that).
I have heard that they now do credit checks and automatically set thresholds. Is your credit rating good?

They hold your funds for 2 to 3 weeks on new seller accounts and accounts that don't have enough of a history for them. They will continue to do this for 3 months or more until they are satisfied that you are an honest seller.

And you say you can't find this anywhere...I am thinking you didn't look very hard:
https://www.paypal.com/us/webapps/mpp/security/paypal-funds-availability
PAYPAL FUNDS HOLD IS!!!! - The eBay Community (http://community.ebay.com/t5/PayPal/PAYPAL-FUNDS-HOLD-IS/td-p/1419091)
eBay.com : Payment process for new sellers (http://pages.ebay.com/pay/help/)
Paypal holds and how to get your money released faster | eBay (http://www.ebay.com/gds/Paypal-holds-and-how-to-get-your-money-released-faster-/10000000172381113/g.html)

The list goes on. To be honest, I think it's a load of garbage but what can you do about it?

I understand that but I know last time I did a transaction, 3-4 weeks ago, service invoice payments were never held, only invoices for goods, so I was wondering if they changed something or it's a glitch

I've gotten 3 policy change emails in the last 5 months. It's a load to read since you darn near have to read the whole thing until you get to the paragraph or SENTENCE that affect YOU. The banks I deal with are doing the same thing though.