I had to do some boring pressure measurements today at uni. After calibrating the big (about a meter tall) old barometer in the lab we got a reading of 0.998 (+/- 0.002) bar.
Have been interested for a while in the accuracy of the pressure sensor on my phone, so I compared it: it was reading 0.9976 bar. Quite impressive!
GPS altitude is inaccurate and add slow. Although you couldn't establish accurate height without knowing local surface pressure at that given time, you could get a rough estimate (speeding up gps locking) and you can track changes in altitude quite well.
Kos is right, they use it for a more accurate altitude reading. If you compare results from tracking a bike ride (for example) on a phone without the barometer it's quite a lot different to with.
That is pretty impressively accurate for something that is stuffed in a mobile phone. Haven't all these sensors in mobiles made gyros and accelerometers and such cheaper for other things?