Hi

If the GS500 speedo is about 10% out above 30mph does that mean the mileage (Kilometerage?) shown can be up to 10% out as well? (I guess it depends on your average speed)

Or does it work out distance travelled in another way?

It's the same.  If your speedometer is 10% high, your actual miles will be too.  But so are everyone else's bikes.

I've read that the speedo cable spins a magnet, which pulls the needle higher; the needle has some resistance to this pulling, due to a clock-style wound spring.  The resistance of the spring is not perfectly linear, so the spedometer cannot be accurate at all speeds.  

Instead, the manufacturer has to pick the most-common speed (say, 50mph), and make the spedometer dead-on accurate at that speed.  The farther you get from the accurate speed, the  more inaccurate the speedometer readings become.

That sort of speedometer inaccuracy wouldn't affect the odometer.  There are probably other sources of inaccuracy which affect both (tire size, pressure, temperature, etc.).  But I suspect that the odometer could be more accurate than the spedometer.

According to my GPS, the speedometer is off by exactly 10% all the way through it's range.  I personally tested it at an indicated 20, 40, 50, 70, and 90 MPH.  20 was 18, 40 was 36, 50 was 45, 70 was 63, and 90 showed as 81.