I'd have to confirm with Walter, but I think we can determine if it is GPS or Pressure altitude, depending on the source. However, getting pressure altitude into the iFly or a portable device is a challenge.
I think the traffic info is very useful. Anything to assist you in where to look to get a visual is very useful. You just have to know what numbers you are looking at. Keep in mind it is also designed to be a reference system that is a perk for GA aircraft. Come 2020, when everyone is ADS-B out compliant, then you should be looking at no issue as that is the one of the big benefits of ADS-B, more accurate GPS position data.
Think of the same scenario with your altimeter (pressure attitude) and your GPS. You'd want to report your Altimeter reading (pressure altitude) to ATC, not GPS as they will be different. Same for staying out of airspace, you would really want to make sure to stay above or below based on pressure altitude, as that is what ATC references. It makes you think, huh. Have a great weekend. Great dialog.
Now it might be possible to pull pressure from the ADS-B info and correct for pressure altitude, provided you have accurate in air ADS-B data. I'll bounce that around the office.