With the announcement of iPhone OS 3.0 and iPhone 3GS, MobileMe got a cool new feature - FindMyiPhone - which would help users find their iPhone if they lose it. Though I have not personally tested, as per many claims, it works nicely. The service includes several features like LocateMe using Google Maps, displaying a message remotely on the phone, and even Remote Wipe, if necessary. There's a big loophole in all this - the one who has the iPhone can pop out the SIM and disconnecting the internet access completely thus disabling the service, as pointed out by the emulator port guru Jonathon Zdziarski (via iPhoneAtlas).
There's a magic button on every iPhone a thief can use to disable remote wipe and LocateMe; it's called the SIM eject button.
After tracing the phone for two days and threatening the thief with messages in various languages, he finally tracked down the thief at a bus stop - with the help of his Macbook (ironically connected to a Sprint USB dongle). This seems to be just a lucky case and you might NOT be that lucky to find your phone but you'll be thrilled to read how he found the phone after an initial failure on first day.
The Intermittent Kevin via TUAW