Yes it can give you elevation but it is not even close to being accurate.

From MB Blog...

The Edge works like any other GPS unit communicating directly with the satellites high in the sky. Using the new SiRF chip promises better signal deep in the trees, which we all know can hinder the effectiveness of using GPS to track distance. Add the wheel speed/cadence sensor and even when the GPS signal is blocked from the sky your bike computer will track the actual distance ridden.

Independent of the sensor that is calculating speed and distance (GPS or wheel sensor), the Edge records the distance between each trackpoint and stores it in a large 13,000 trackpoint repository, to be retrieved later by the MotionBased Agent. This addition means that statistics at MotionBased can now perfectly match those statistics reported on the Edge 205 and 305 during the ride. Probably our most commonly and passionately requested feature to date and one we've been eager to provide.

Although GPS altitude is recorded by most modern GPS units, the accuracy of the altitude can be incorrect if a clear view of the sky is hindered by trees, buildings or nearby hills. Barometric altimeters found on many watches provide a more stable view of the altitude, but require calibration to a known altitude on earth. If you knew the altitude then why carry the watch, right? Beyond initial calibration the barometric altimeters accuracy can change throughout your activity due to changes in the weather.

Garmin GPS units with barometric altimeters (eTrex Vista, Geko 301 and now the Edge 305) auto-calibrate the altitude using the best of both technologies to make sure your altitude is as accurate as possible. The Edge 305 uses this combination of altitude sensors to provide cumulative elevation gain on the device, much like MotionBased does with our Dashboard Elevation view corrected with MB Gravity.