Mocking up a layout using paper or another medium will certainly get you down the road of "measure twice cut once" when it comes to designing and developing web applications, but to me, paper prototyping feels like using an abacus in a world with calculators. Web sites aren't made out of paper. They don't function like paper. They don't feel like paper. So why use it? To keep it simple of course. There is no need to build a calculator to answer simple math equations, when pen and paper works so well. But not all web applications are that simple. Some are quite complex and trying to convey the flow of a user through a shopping cart or another piece of an app can be difficult using paper prototyping.

PowerPoint (or any other application like it) is much more suited for this type of prototyping. PowerPoint gives you the ability to create button like structures that can link to other slides, giving the impression of the real flow of a user through a cart. You can save the "controls" into groups and easily re-use them throughout the application.

Not to mention that someone has already created some very good "out-of-the-box" controls for mocking applications in PowerPoint. Download them here.

Video: Wireframe Prototyping using PowerPoint 2007