First let me start off by saying that I use Google Analytics on all of my sites and it has some great tools, you won't find me arguing that point. The thing I want to bring to your attention is how inaccurate Google Analytics is and how much traffic you might be getting that Google Analytics does not show you.
If you've installed Google Analytics you know it's as simple as copying a little bit of code on the bottom of you pages. This code, as you probably also know is JavaScript. JavaScript is a client side scripting language that the user has the ability to disable at any time and believe it or not a lot of users do. Since Google Analytics is built entirely using JavaScript if a user has JavaScript disabled no hit will be recorded, none, zilch, zero, zip. Now, you might be thinking that it's insignificant, so what if a couple people that come to my website have JavaScript disabled, I'm trying to get a general overview of my traffic I don't care about exact numbers. This maybe be true but I think you might be surprised at just how much traffic you're actually NOT seeing in Google Analytics and how it could effect your statistical analysis of your visitors.
It's hard to pin down an exact number for how many users disabled JavaScript but from everything I've read and by analyzing my own and other websites I run stats(non Google Analytics) it's somewhere between 7-9% of users. At first glance this may seem small but when you put it into consideration of how many people are using the Internet it starts to get scary. As of today, August 2007 there are an estimated 1.1 billion Internet users. ONE POINT ONE BILLION, that's a lot of users. Now, take that small 7% figure and you have roughly 82 million people that have JavaScript disabled. Obviously these numbers are large and you don't even come close to a number like this on your site(do you?) but that's 82 million people that if they did visit your website would not be recorded by Google Analytics. That's a lot of missed stats.
Obviously there are some holes in this logic but it's not meant to be a eye opener but rather something you keep in the back of your head when viewing you Google Analytics stats. When you're looking over you stats it's probably safe to say you're getting at least 5% more visitors than Google Analytics is showing you. So, if your websites gets 10,000 unique hits a month you can assume that in reality you're getting somewhere around 10,500 - 10,700 hits. That's over 500 people you know nothing about. You don't know what they did on your website, you don't know what they read or purchased and you don't know if they are new visitors or returning. Google Analytics is a great tool but by failing to capture the whole picture as far as who comes to your website you might be missing the most important part of the tool...the data.