That's it exactly. Which is why GPS is more accurate in urban areas than in undeveloped areas. Because maps of urban areas are very well made and the roads are not apt to change. With undeveloped areas, they may try to use forest service maps and such which show dirt trails, old unused logging roads, and such. These are the directions that GPS gets wrong.
And in the case of the OP, it wasn't that the GPS was taking people incorrectly, it was that the people were too naive/dumb/impatient enough to realize that in a flood situation, GPS is not going to differentiate between a flooded road and a non-flooded road.