I'm deeply involved in a UAV project at the moment (4m span jet/prop hybrid) and I can tell you that the guidance system can be as sophisticated or as rudimentary as you like -- depending on needs.

The system I've built uses GPS for way-point navigation, IR sensors for stabilization, barometric and ultrasonic for altitude (including approach/landing) and doppler radar for collision avoidance.

We're hoping to have our third prototype (the first 4m one, the others were 1.6m and 2m) operational before Christmas. It's not exactly a "small" craft, having a maximum all-up flying weight of 100Kg and a designed top speed of around 375mph.

There's surprisingly *little* model aircraft technology in this larger craft -- most of it has been designed and built in-house.