My wife, stepson, and I carpooled today. I picked them up at school and we made the 45-minute drive back home. As we parked the car, my wife noticed that she didn't have her iPhone. She initially thought she had left it back in the teachers' lounge, so she called some coworkers to ask them to check. None were still at school, so one of her friends drove to school to look for it. It wasn't there.
So, my wife fired up MobileMe and went to Find My iPhone. It indicated that the phone was on Georgia SR 400 (a multilane freeway), in the northbound lanes between exits 14 and 15. She realized that she must have left the phone on the roof of the car while she was getting in, and it fell off when we were on the freeway.
The good news was that it was reporting its location, so we knew approximately where it was and that it was still functional. We hopped back in the car to go retrieve it.
I didn't know how accurate the reported location would be. I suspected we'd be walking up and down the freeway in the dark and beating the bushes on the side of the road to find it. But she spotted it immediately, a few feet to the right of the edge of the freeway, within a few dozen yards of where it was supposed to be.
We pulled over and went to pick it up. We could tell from several yards away that the glass was cracked, but it turned out that only the back glass of the iPhone 4 was cracked. The front glass was fine, and everything was fully functional. (A little Googling indicates that Apple will replace the back glass for $29.) The bumper was a little mangled, but apparently it did its job.
So, all in all, this was a good outcome. We got lucky in that the iPhone didn't break when it hit the pavement, that it didn't land where a car would run it over, and that it didn't skitter off into the brush, but if we hadn't had MobileMe, we wouldn't have ever known where to look for it.
I sometimes think that MobileMe is overpriced, and think about cancelling it, but I'll remember this incident whenever I think that.
Epilogue: My wife called the friendly neighborhood AT&T store (where she bought the phone) and asked about fixing the broken back glass. They directed her to a cellphone repair service which quoted $130 to fix it. I called the Apple Store, and they confirmed that they would fix it for $29. So, once again, AT&T proves itself to be the worst part of the iPhone customer experience.
And in the end, Apple replaced the back glass at no charge.
As of iOS 4.2.1, released 2010/11/22, Find My Phone is now a free service. You don't need to pay for MobileMe to get it anymore.