Not that losing one's phone doesn't happen. My brother (the one with 5 kids) lost his brand new christmas-present-android-phone for 3 months before finding it in one of the kid's shoes, and my mother is currently on day 6 of her searching for her trusty feature-phone, and no - this isn't the first time.
But if your iPhone is stolen, all they really have to do is turn it off and/or take the sim-card out, and your iPhone is pretty much gone for good. A smart thief who just wants the hardware will do just that, and at the earliest opportunity push a series of buttons to do a factory-reset to wipe all the settings on the phone, after which it will no longer be find-able using this app.
Here's the most complete description of the limitations I've found, even though they are a bit buried in the text.
The ones that stuck out for me were:
You have already initiated a wipe of the iPhone, iPad, or iPod touch. The device will not appear on the page until it is reconfigured with your MobileMe account information.So if your iOS device is wiped, you won't be able to find it again with the the "Find my iPhone" system - wiping your phone is an irreversible process. That prompted me to turn off the "Wipe phone after 10 unsuccessful attempts" option I had turned on in the passcode security settings.
iPhone: Your cellular service has been terminated by your wireless service provider. If you contacted your service provider to report your device lost/stolen before locating/wiping your phone, and they deactivated your SIM card or account, you will no longer be able to locate, display a message on, or remotely wipe your iPhone.Watch-out for that one - it would be easy enough to do in a rush to avoid stolen call charges. If you call your network company (AT&T, Rogers, Telus, Bell, Verizon, or whoever) to tell them your phone is stolen, and they suspend or cancel your account , "Find my iPhone" isn't going to work very well for you either.
Not surprisingly, it doesn't work when the device is switched off:
Your device is powered off (for example, the battery has run out). You can still send a message to, issue a Remote Lock request, or initiate a remote wipe of your iPhone, iPad, or iPod touch, and it will be received once the device is turned on and regains its Internet connection.
So "Find my iPhone" isn't the perfect tool for recovering a stolen iOS device, even though I think for many people - at least for me - that is the use case that first comes to mind. An informed thief will just turn the device off and wipe it at the earliest opportunity. Still, there are plenty of anecdotes online of people recovering stolen iOS and Android phones with the help of this (or similar on Android) software, so in some cases it may help with a stolen phone. Moreover, from examples of my mother and brother - recovering a lost phone is a not-insignificant benefit for many users.
The spy vs. spy sex-appeal of tracking your stolen phone sure gets the blood pumping, but I'll bet the balance of benefit between recovering lost phones vs. stolen phones is weighted pretty heavily on the side of lost phones.