I've used one of these and they are not bad. Sometimes the GPS can drop out nullifying your time. But having said that, a very cool little add on for a mobile phone.
I would imagine the software corrects anomalous readings by averaging acceleration between updates, and interpolates the exact time / speed / location between two measuring points when crossing the target parameter. The lack of precision of launches compared to lap times and 80-120km/h performance is also attributable to this method. *EDIT* Damn too slow response!gps only updates a few times per second, and is only accurate to within like 5 - 10 metres, how can this be accurate?