GPS receivers display speed and calculate the speed using algorithms in the Kalman filter. Most receivers compute speed by a combination of movement per unit time and computing the doppler shift in the pseudo range signals from the satellites. The speed is smoothed and not instantaneous speed.
HOW ACCURATE IS THE SPEED READING?
From the NAVSTAR GPS User Equipment Introduction document Section 3.7:
GPS receivers typically calculate velocity by measuring the frequency shift (Doppler shift) of the GPS D-band carrier(s). Velocity accuracy can be scenario dependent, (multipath, obstructed sky view from the dash of a car, mountains, city canyons, bad DOP) but 0.2 m/sec per axis (95%) is achievable for PPS and SPS velocity accuracy is the same as PPS when SA is off.
Velocity measured by a GPS is inherently 3 dimension, but consumer GPS receivers only report 2D (horizontal) speed on their readout. Garmin's specifications quote 0.1mph accuracy but due to signal degredation problems noted above, perhaps 0.5mph accuracy in typical automobile applications would be what you can count on.
HOW FAST CAN I GO AND HAVE MY GPS READOUT MY SPEED?
All Currently manufactured CONSUMER GPS receivers we know about will measure speed to 999 miles per hour.
Garmin (uniquely as far as we know) manufactured the G-38, G-40, G-45, and the G-II (not PLUS) units which had a 90 mph speed readout limit. These units are manufacturing discontinued and we know of no other manufacturer who made a unit which would not go to 999mph.
HOW HIGH CAN I GO AND HAVE MY GPS READOUT ALTITUDE?
Defense department regulations prohibit standard consumer GPS receivers from functioning above 60,000 feet and 999mph (simultaneously). Most GPS receivers seem to set hard limits at EITHER 999mph or 60,000 feet.