I believe vertical distance is more accurate because it is using the flight level broadcast in the mode C (or equivalent mode S) transmission.
Distance is fairly accurate as it uses properties in the signal (that doppler shift thing presumably).
However direction is much harder to detect. For an analysis, see
http://www.dtic.mil/cgi-bin/GetTRDoc?AD=ADA293670 (I don't know how directionality is calculated).
Most of the time, the error is around 4deg but can be as much as 30deg. The error is installation specific (as the directionality is effected by the shape of the aircraft the detection system is attached to). In the link above, there was very poor detection around the 180 deg bearing due to interference from the aircraft's tail. Perhaps thats why PCAS units only give you a basic 45deg compass point rather than a bearing? Depending where in your aircraft you put it will depend on its accuracy.
However in saying that, I still can't see what the problem is with saying that someone is 5 miles behind you when the airwaves are fairly quiet, so long as everyone knows how big a pinch of salt to take that information with.
Of course - PCAS is only useful if someone else is actively pinging the mode S transponders in the area (a TCAS unit or an SSR) so you can listen in, and the other aircraft have a working mode S transponder in the first place.