With good accuracy sometimes.
Infact the GPS is rather useless without an Internet connection anyway, as the Maps app loads thr maps from google.
I have been holding off getting an iPad until the 3G version comes out because it will have GPS functionality the same as the iPhone 3GS and therefore it will be able to take advantage of all the Apps that use the GPS Location service.
Here is the "Location" section
* Digital compass
* Assisted GPS (Wi-Fi + 3G model)
* Cellular (Wi-Fi + 3G model)
This is how Apple explains the Location service on the iPhone:
GPS (Global Positioning System) technology uses information from earth-orbiting satellites to find locations. A-GPS (Assisted GPS) on iPhone 3GS goes a step further, finding the closest satellites to more quickly identify your position. If you?re not within a clear line of sight to a GPS satellite, iPhone finds you via Wi-Fi. If you?re not in range of a Wi-Fi hotspot, iPhone finds you using cellular towers. The size of a location circle tells you how accurately iPhone is able to calculate that location: The smaller the circle, the more accurate the location. iPhone also offers a built-in digital compass that automatically repositions maps to match the direction you?re facing.
Check out this link for further information about the GPS built into the iPad w/3G version only
"So, turn-by-turn directions on a 10-inch super high-resolution color screen are about to become a reality."