I've built PVC flutes (kind of, they're structurally more similar to tin whistles) and they sound pretty well. I think Todd's right when saying the material is not too relevant to the sound, the requirement is that it is workable to allow us to build the instrument. Electrical white pipe (the one used inside walls to carry electrical wires) is easily workable (softer than grey water pipes) and gives quite good results.
You'll need rather small gauge pipe, I expect perhaps something like 1 cm diameter, to be easier to play, specially the lower tones (longer pipes). But try your hand (I should say you mouth :-) with a beer bottle, if you can make it whistle you can probably venture with pipe of similar gauge.
DIY flutes are largely a matter of chance, like Mathew said it's more what you get than what you aim for. The good news is that a pan flute, as opposed to a "proper" flute, is rather easy to tune, just trim the top of each pipe to up the tone little by little (and cut another piece of pipe if you inadvertently go to far :-). Or, if you can adjust the position of the plugs that close the end of the tubes, that can also be used to fine tune each tube. BTW, cork is a wonderful material for this, as it is easy to work and provides good fit and air tightness, specially if you rub it with a bit of vaseline. Wood can also be used, and you can ask a carpenter to make a dowel for you with the exact diameter that you need to fill the pipe. But wood does not deal well the humidity and saliva from playing the flute.
What scale? There are "pan" flutes all over the world (or were, as apparently they have become out of use in China and Japan), so I don't think there's a specific scale that can attributed to this type of instrument. A major diatonic scale seems the more natural choice, but it's just a possibility. Why not a pentatonic, or, for that matter, why not an indian raga?