As I said, I think you can get consistently within 1%, but it doesn't come for free. You will need to calibrate with all your shoes on different surfaces, and possibly at different speeds. Plus you need to be sure you fix it tight, and the same way each time. If you manage it less, you may get results more like the Masters student at 3%.
For a hint about how to manage calibration, this guy did more than most ever will:
http://users.telenet.be/wy/sport/S625X/S625X%20Accurate%20Speed-Distance%20Measuremnt.htm
http://users.telenet.be/wy/sport/t6/t6%20Accurate%20Speed-Distance%20Measuremnt.htm
He collected lots of data and screenshots, and really explores all the issues with calibrating footpods.
As far as I know, they only work with watches. The footpod adds about $100 to the price of a watch, and watches start at about $150.
Polar has two generations of footpod: the S1 and the S3. The S1 is bigger, and uses non-coded "analog" transmission (subject to interference from electrical lines), while the S3 is smaller, using "digital" transmission with handshaking. The S625X (described in one of the links above) came with the S1, and as you will see, had a few problems. The RS800CX fixed some of problems.
Looking at Polar's website, costs for a watch with a footpod:
RS300SX SD with S1: $249.95
RS400SD with S1: $369.95
RS800CX with S3: $519.95
Suunto has a few products too. Their footpod compares more to the S3 with digital transmission and handshaking:
T3D: similar to the RS400, if it came with the smaller S3
T4D: like the T3D, but with a "coaching" feature
T6D: more like the RS800CX running watch
I didn't find prices at their website, but I bought the T3C (previous model) for ~$150 and the footpod for ~$100. In my opinion, for $250, this combination is better than the RS400SD. The T6D is likely comparable to the RS800CX.
For distance measurements, there won't be much difference between the models. The main differences have to do with more features: how much data it collects, and the capability to upload the data to PC software.
You may find other brands available for less (e.g. the tester above also tested a NIKE TRIAX ELITE and a Philips Nike MP3run. This one was cheaper, and more accurate than Polar's S625X, but I guess it lacks features).