The original poster is quite correct in that the earth is not a perfect sphere. Over the span of my flying career, the observed wisdom on the shape has changed from flattened at both poles, through pear-shaped to terroidal (i.e. earth-shaped!). People who design navigation systems and cartographers need something more regular on which to base calculations.
Originally a perfect sphere sufficed but in the age of centimetric accuracy and the computing power available to do the sums, an "osculating spheroid" has been developed. This is essentially the harmonisation of the knobbly true earth with the perfect sphere. Osculating comes from the Latin word for kiss - essentially the two superimposed spheres touch occasionally. It isn't perfect but it's the best so far and it seems to work.
To answer the original question, a nautical mile is still defined as one minute of arc along a great circle which is more than satisfactory for all navigation purposes unless you are constructing a precision database. The philosophical question is whether you can actually have a great circle on other than a perfect sphere.
Confundemus
