Does the system rely on knowing the position of the
satellites to equivalent accuracy?
Base stations calculate the satellites' orbital parameters, and estimates of errors due to satellite clock error, and the ionosphere and troposphere, and transmit them to the satellites; the satellites send them on to receivers. The orbital parameters don't perfectly describe everything about the orbits, so they're updated every 30 minutes or so. Back in 2000, the RMS error was about 5m [1], with inaccuracies distributed in such a way that the user equivalent range error was around 2m. It may have improved since then.
i.e. "millimetres" accuracy for differential GPS.
The orbital parameters transmitted by the satellites are not millimetre-position - but for differential GPS, the same differential approach that can cancel out errors due to the ionosphere and troposphere can also cancel out errors due to inaccuracy in satellite position reports. From the user's perspective, an error due to inaccurate ephemerides looks a lot like an error due to an inaccurate satellite clock or a signal delayed by the atmosphere.
If so, how is this accuracy achieved? (Obviously the
satellites themselves cannot use gps to determine
their position...).
Satellites are tracked by a network of base stations at known locations, called the 'control segment' of the GPS system (the other parts being the 'space segment' (satellites) and the 'user segment' (receivers)). Satellite position is tracked by working backwards from the received GPS signal, and the satellites can also be tracked optically (the satellites carry retroreflectors [2] so they can be tracked with special laser range finders).
The most recent satellite position measurements are extrapolated forward to work out near future positions, which are then transmitted to the satellites.
Are there any events (micro debris strike, solar
wind?) which cause drift in our estimate of their
position?
Loads of things have to be taken into account [3]. From the gravity of jupiter to the fact there are reflected photons on one side of the earth but not the other (the latter is admittedly only 30cm per day).
For more information, the satellite orbits are called 'ephemerides' or 'ephemeris' and you'll find lots of info on Google now you know the right keyword to look for!
[1] http://gauss.gge.unb.ca/papers.pdf/COSPAR2000.pdf
[2] http://gpsworld.com/expert-advice-laser-reflectors-to-ride-o...
[3] http://www.colorado.edu/ASEN/asen6090/broadcast_vs_precise.p... http://igscb.jpl.nasa.gov/igscb/center/analysis/noaa.acn