Servo jitter - me too

I suspected bad distance reads where due to power surges on the one battery system

You don't get any power surges on a battery, so I don't know what you mean.

Supply decoupling and common grounds are vital, reading these links might help you:-

http://www.thebox.myzen.co.uk/Tutorial/De-coupling.html

http://www.thebox.myzen.co.uk/Tutorial/Power_Supplies.html