I have the AW S0 using WOS3 and the stride length calculation is very accurate. (finally!)
I reset my calibration data and ran with mine twice for 60 minutes each time about 5 weeks ago when WOS3 first came out. Since then, I have run more than a 15 times and the Watch has been very accurate for my entire 7 mile run (within 1/10th of a mile, total). I have had several days where it recorded the same distance as my Garmin Forerunner and others where it was off by a very small margin. The accuracy is related to your average pace, so the closer you run to your calibrated pace, the better it will perform. I upgraded to WOS3.1 two weeks ago and I did not have to recalibrate my Watch after the upgrade to maintain the same accuracy.
From my experience, you do not have to buy a Series 2 to get an accurate run distance *without* your phone, as long as you are using WOS3. If you do not care about the run maps, the swimming or the brighter screen, there is really no reason to return your Series 1.
TxWatch