You're gonna have to pay me more than $200 to risk a possible stabbing to retrieve your iPhone, in which case you should probably just go buy a new one.
A brutal robbery/assault locally was solved because the attackers stole an iPhone, which had location services turned on. The police had him within a few days. The other two suspects were identified on his facebook page.
There is a much better (and much cheaper) version of "Find my iPhone" functionality for jailbroken iPhones called iLocalis (http://www.ilocalis.com). It can do things like force your phone to call a number, send you an e-mail when the SIM card is swapped, etc.. I've been using it for months and it's helped me find my phone several times already (although thankfully it hasn't been stolen).
iLocalis looks interesting, but do you trust those guys with all your information? I mean they basically know where you are at any time of the day, they might be able to browse your iPhone data, ...
That's a great point. Although I trust the guy who runs it (it's a small project run by an independent iPhone hacker/developer), there's no question that a service run by Apple is more trustworthy.
From my view, however, the cost/benefit analysis strongly favors installing the app. Benefit: It has saved me $500 once already. Cost: 14€ + (chance that the data on my phone will be used maliciously) * (average amount of financial damage that would be done in one of these instances).
But in my opinion, the "Find my iPhone" feature of MobileMe is not comprehensive enough. For example, it should still work if the SIM card is swapped. It should work even if the only available connection is Wi-Fi (such as being indoors) and should report back to the user the name of the hotspot. It should work if the OS is wiped/reinstalled.
iLocalis doesn't do all of these things, but it's much closer.
Nerves of steel? I thought stolen phones would immediately be used to call the most expensive sex hotline possible? So my first move would have been to block the account, not sleep over it in vague hopes of iPhone finder getting it's act together.
I found myself doing just about the same thing (eerily similar settings in my neighborhood in Brooklyn) when my girlfriend's iPhone was stolen just a few days before WWDC and the Find My iPhone announcement.
At the time I wished for nothing more than this exact technology, but days later when we were reasonably sure we had found (through a few degrees of separation) who had stolen the phone and were still unable to get it back, it dawned on me that this might be one of those social issues that will go mostly technologically unsolved at least for the time being.
Apple store personnel treat iPhones/iPods like cord wood. If it breaks, you often just get a new set of hardware. The iPhone might require a sim swap. Given that, there is a financial/technological fix: insurance plus customer service.
On the technological side, send a signal to erase the contents of the phone and permanently disable it. Apple could then give you a new phone. This could be a service like AppleCare, but which would expire every time you used it.
The cops wouldn't have been able to do much, and they probably wouldn't have cared. I once found an 80gb iPod on the street in Brooklyn - brand new. I took it to a cop and he just said "congratulations".
Overworked and underpaid. The cops, especially in a place like Chicago, don't have the time (or the inclination) to search for a few hundred dollar piece of consumer electronics.
Plus, I don't imagine a blue circle on a Google map would convince a judge to issue a warrant.
