I used to have dark pigmented skin around my neck, and underarms area. However, since I began my Paleo diet, it has become noticeably lighter. Is this one of the effects of being on Paleo? or it just happens to be coincidence? or is there something else wrong with me?
I'm guessing that you might have had Acanthosis Nigricans, or darkening of the skin, usually in skin folds like the neck or under the arms, which is associated with insulin resistant diabetes. Going low carb has probably either reversed or significantly improved your insulin sensitivity to the point where the skin condition was able to heal on it's own.
So no, I wouldn't worry - it's actually a pretty encouraging sign that your body is well on its way to recovery. However, if something's bothering you in future don't talk to the internet about it or cross your fingers that it will clear up on its own - please go talk to a doctor!