You cannot always compare a water-based speed (paddlewheel) to a location-based speed (GPS).  They are really measuring two different speeds two different ways.  GPS measures your speed across the face of the earth, assuming a perfectly straight course, the paddlewheel measures your speed through the water.  The only factor to affect the speed reading for the GPS is the accuracy of the GPS system and the course of the boat.  Current, wind, course and the way the water strikes the paddlewheel all affect the water based speed measurement.     

The GPS system uses clocks that are only off by fractions of a second every one thousand years.  There is no paddlewheel system that has near the accuracy of a GPS.  One knot is probably within the speed tolerance specification for this gauge. However GPS speed does not react quickly to fast stops and starts.