well, arduino can use pretty much any stanard sensor, pick your sensor. The GPS module will interface via serial, that's easy enough. The rest will be TWI or I2C probably (just a variation on serial), the LCD you'll do with 4-bit parallel and you'll need a couple of switches for user input I would think.
What you describe really isn't all that complex, probably the largest gotcha is keeping two linked wirelessly to sense incline. I might suggest just adding a wired sensor to the upper arm, the device being torso-mounted. Relative position is going to be the largest pain the design.
"Shields" are just boards that make connection of various addons easier. An xbee shield makes it easy to plug in an xbee module, an ethernet shield adds an ethernet controller.
Any arduino is up to this job.