Find My iPhone was one of the best things Apple showed off on Monday at WWDC—track your phone, send harassing messages, etc. It works, but whoever pinched your iPhone can just turn off tracking right from the phone.
So, if you wanna steal your friend's iPhone and not have them know where you absconded to, all you have to do it go into Settings, then hit Mail, Contact, Calendars and click on the MobileMe account. Turn off Find My iPhone and all your friend will get is a little yellow warning symbol when they try to track it if the phone's been previously located (see above).
Even if they're not smart enough to dig into the MobileMe account setting, all you have to do is turn off Location Services under General settings—that also cripples Find My iPhone long enough to get it back home to wipe it out completely so it's untraceable.
You can still send nastygrams to the iPhone via the service as long as the phone is still online, so presumably Remote Wipe still works as well, though neither of those will actually help find your iPhone.
Update: Yes, this all obviously assumes they can get into your settings if you haven't passcode-locked your phone or they figure out what your passcode is.
Luckily, it seems like even with this massive vulnerability in the tracking feature—you know, the one the service is named after—it should still be more than enough to catch most iPhone thieves.
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