Found this :

http://www.gpsaustralia.net/forums/showthread.php?t=18681

If the GPS has two lat/long coordinates, each with an elevation, and stores this data it capable of calculating the actual distance walked from point A to B, but apparently Garmin does NOT. You get horizontal distance. Then you download the data and convert to the hyoptonuse distance as a post processing function. Of course you only get the distance between measured points, so if you are not on continuous data gathering, you get a choppy set of numbers. There are tons of calculation algorithms out there on the internet that convert.

There may be some GPS units that have a chip inside that converts, thus allowing you to choose how you want distance presented. I suspect most do not simply because there appear to be many different ways to calculation depending what you want to measure. Anyway Gershon needs to look in his manual and see if there is a setting that allows one or the other.