I also purchase a Nike+ top, which has an embedded little pocket on the arm that houses your ipod nano, and also includes cable holes, so you're not running around and also strangling yourself at the time.
To calibrate the device, I popped my trainers on and wandered into town a couple of weeks ago, managing about 400metres, however today, managed around 2.18 miles. How do I know this ? Well, when you dock your ipod into the PC, it automatically updates the runs up to T'interweb via iTunes, giving you graphical view of when you slowed down, when you speeded up and updates every mile (or Km if you're metric).
Nike+ :: faster than me, obviously.
The Nike+ application also allows you to setup goals, mine is to run 10 miles in 8 weeks (of which I've done 2.1 miles so far) and it also allows you to challenge other Nike+ users within the same area or same age or same sex.
The Leaderboard function gives you a list of people (per week, per month, or ever) which allows you to drill down per sex, per geo, per age. Currently, out of everyone, I'm 10125th, and in the UK, 786th, and finally, in the UK, between the age of 30 and 39 and male, I'm 268th - impressive.