How accurate can I be with Servos?

You won't get 3 digits of accuracy from a servo. And even if the surface is quite flat you will get some error due to slippage so an encoder may not solve the problem, although its worth a try. Can you say more about the task and any restraints (for example, can you set up a few ultrasonic reflectors around the periphery so your vehicle can triangulate a fix from them)