GPS velocity
Did a little work on the subject.
How the velocity is determined depends on the receiver model. On high-grade models you may find a velocity determination through doppler-effect, on the low-grade ones, frankly, I don't know, but probably not.
LH2's approach will not get you far. GPS can be horribly complicated, and most GPS marketing guys have no idea (sorry).
Manufacturer data MAY be correct, but as usual, check for yourself before planning to do anything important with the data.
On a good GPS model, accuracy of velocity will actually be a lot higher than position accuracy, but that's comparing apples and oranges...
If you have a GPS capable of relative positioning, you probably will get very good accuracy (more than enough for most aviation-type applications)
Precise numbers will actually depend on time of day etc... (satellite positions...)