Nike+/iPod Nano - why is accuracy SO bad??

I'm really curious as to why the accuracy of this system is so bad (sensor in shoe) - and I'm not talking about an issue that can be solved with a calibration. Today's run is a perfect example:

I hopped on a treadmill, set the speed to 6mph (slow one today!) and ran for 1 hour. At the end of the workout, I was pleasantly surprised to hear that I had run 6.04 miles - all should be ok then, right? Uh, a big "no" to that one. When I logged in to the Nike+ dashboard, it actually showed these huge peaks and valleys where my pace would shift from under 8min/mile all the way to down to 14min/mile. The fact that the total distance turned out ok at the end was a total fluke. I get that there might be random disruptions in BT communication - but the graph made it look like I was running up/down 4 big hills.

I've seen nothing like this, and can't believe I'm the only one - as it stands now, this is completely useless. The $20 POC I wear on my wrist is 100x more accurate than what Nike and Apple cooked up together...