Nike + iPod collects workout data from a wireless sensor (sold separately) that you attach to your shoe. Before you use it the first time, you need to link your sensor to iPhone.
Shoe, meet iPhone. To link the sensor to iPhone, attach the sensor to your shoe, then go to Settings > Nike + iPod > Sensor.
Be accurate. To calibrate Nike + iPod, record a workout over a known distance of at least a quarter mile (400 meters). Then, after you tap End Workout, tap Calibrate on the workout summary screen and enter the actual distance you covered.
Try again. To reset to the default calibration, go to Settings > Nike + iPod.