The one thing I'd say about the setup I use is that its very easy to change software, update databases cheaply, customize etc. If you go for a purpose built portable aviation GPS unit then you're stuck with it and its software. Also you're somewhat limited in that database updates are only available from the GPS manafacturer. There is constantly more aviation software becoming available for the PocketPC all the time. For example in the US you can interface the PocketPC with a GPS receiver and also with a receiver which gets weather radar images transmitted from the ground in almost real time and overlays them onto the moving map.
Virtually all moden GPS receivers are the same when it comes to accuracy in the form of position, so a cheap £100 unit will generally give as accurate results as a £1000 unit. I've had a $90 eTrek operate at over 200kts with no problems. If you're planning IFR flight then of course you have to go for a panel mounted IFR certified jobby, and keep the database up to date.
With the iPaq you can get a Compact Flash GPS card which slots into the unit which looks pretty cool. For around £800 inc the iPaq you get something which in my opinion is better than any portable aviation GPS unit.
If anyone is interested, you can find out how GPS works by taking a look at
http://www.howstuffworks.com/gps1.htm
Cheers
EA