On a flat trajectory, the speed is as accurate as any device you can find. However, since a GPSr only measures latitude and longitude, when you go up or down hills, the speed and distance will be measured at less than what is actually traveled.
Many GPS units now have what is called "3D" mapping, which means that if you are locked onto four or more satellites, it will display your current altitude. Unfortunately, the unit's computer is not programmed to factor that into the speed and distance traveled.
That's what accounts for the difference between a device that measures the distance on the ground, (cyclometer) and one that measures the distance between two points, (GPSr).

(edit) - Added visual aid. The GPS sees all three of these as 1 mile. Clearly, each bike is not going to travel the same distance. Thus the speed will also be incorrect.
Full size graphic