Google Analytics should probably be used alongside another service - Google Analytics uses a something called Page Tagging (using javascript) to measure traffic. While this method is fairly effective for measuring unique users and tracking events that don't involve making requests to a web server (eg, flash action scripts), it is not good for measuring page views that occur when a page is (1) already cached in the user's browser or (2) being viewed in a browser that has security settings that block this sort of tracking.

Another way to measure traffic is through log files, used by services such as Awstats. Log files may give a more accurate page view number but a less accurate unique visitor number.

In conclusion, if you use Google Analytics (it has a nice interface, and is good for setting Goals and coordinating with Ad Sense/ Ad Words) it may make sense to use it alongside one of these other services.

Here's a good article on the topic: http://www.developmentseed.org/blog/analytics/faceoff_google_serverlogs