Last I hear the speedo was connected to the VSS line, which is connected to a sensor on the tail section of your transmission. So the speedometer should indicate how fast the transmission and driveshaft are spinning.
It likely 'jumps around' a lot because there is very little resistance to the powertrain, unlike when you have traction, where the weight of the vehicle acts as a 3000 lbs damper..
Of course all bets are off w/ your old car and the bouncing off the stopper behavior.
Originally Posted by 4X2XLT
limited slip doesnt help to much on ice...
No, and not much other than super sticky or studded tires will do much really..