It depends on your model of iPad.
The WiFi-only iPad, like the original iPhone, does not have GPS (or A-GPS), but rather uses Skyhook, which triangulates from known WiFi base station locations by sending out pings to these stations and calculating how long it takes for the signal response to work out your location.
This means it will be very accurate in an urban location with lots of WiFi base stations, and in some instances will be more accurate than satellite GPS because it'll work even when you're surrounded by tall buildings, tree cover or even underground (which degrades satellite GPS navigation.) As you head out into suburbia and the countryside where WiFi stations are sparse, its accuracy will decrease or stop altogether.
On the other hand, the iPhone 3 and 4 series, and iPad WiFi+3G all have A-GPS, which is genuine GPS -- plus because it's "assisted", it works even better than regular GPS as it uses cellular information to obtain your location faster, in addition to regular satellite signals. (Thus, any smartphone with GPS uses A-GPS, for obvious reasons.) Presumably these should also have Skyhook, so the GPS on these devices will also work when you're underground, obstructed by tall buildings, etc.