Descansa en la paz means "Rest in the peace."
While that may be a possible translation, you also have the confusion of "Rest in La Paz, Bolivia."
http://maps.google.com/maps?hl=en&q=la+paz&um=1&ie=UTF-8&split=0&gl=us&ei=4nKHSdGtFOHAtgeOmcHNCQ&sa=X&oi=geocode_result&resnum=1&ct=title
Much safer just to drop the 'la' and say "Descansa en paz."
_EW_
