Coordinate System Types ( from ArcGIS desktop help)

• A Geographic Coordinate System (GCS) uses a three-dimensional spherical surface to define locations on the earth. A GCS is often incorrectly called a datum, but a datum is only one part of a GCS. A GCS includes an angular unit of measure, a prime meridian, and a datum (based on a spheroid).
  A point is referenced by its longitude and latitude values. Longitude and latitude are angles measured from the earth's center to a point on the earth's surface. The angles often are measured in degrees (or in grads). 
• A projected coordinate system is defined on a flat, two-dimensional surface. Unlike a geographic coordinate system, a projected coordinate system has constant lengths, angles, and areas across the two dimensions. A projected coordinate system is always based on a geographic coordinate system that is based on a sphere or spheroid. 
  In a projected coordinate system, locations are identified by x, y coordinates on a grid, with the origin at the center of the grid.

Coordinate systems and 3D analysis. 

The Geographic Coordinate System provides a way to store common coordinates for locations anywhere in the world.. Due to this fact it is used in many areas (Location based services, navigation, etc.).

If however we want to measure distances and areas on data in a GCS we are facing an obvious problem - the units of measure of a GCS are actually angles - a distance of 2.5 Decimal Degrees does not mean much, an area of 1.5 "Square Decimal Degrees" (if such term existed) means even less.

One can argue that using GCS we can calculate distances and areas on the Spheroid and the results will be in meaningful distance/area units (meters, feet, etc..) and more accurate than the results derived from projected data. This might be true, but only on large scale (continental) data where the projected data will be more distorted by the single projection used to represent it in Cartesian coordinates.

If we take into consideration the geographic extent of the surface data that is normally used for 3D analysis, we can conclude that an appropriately selected projection for the location of the data will give us better results.

Based on the discussion above, the functions of ET Surface work

• On surface data in any Projected Coordinate System.
• Surfaces (Raster, ESRI TIN, PolygonZ TIN) that are in a Geographic Coordinate System, need to be projected to a suitable projection first.
• In order to get correct results for Slope,  Volume and 3D Area the Z units should be the same as the units of the spatial reference of the data.