Erica Sadun over at The Unofficial Apple Weblog (TUAW) has come up with a useful mobile application/hack for the iPhone. It's called FindMe, and just like the name suggests, it's a location-based service that helps you find your stolen or misplaced handset, and potentially whomever is in possession of it.
It works by auto transmitting your phone's location in the same way the iPhone currently does for the Maps application--by using the location of local cell phone tower or Wi-Fi signal. In this case, the catch is that the service employs Twitter to send the status updates, meaning you and a few other folks can monitor the signal privately, and check the location right on Google Maps.
When it comes time to actually find your stolen phone, things might get a little difficult. While the system gives you a general location that's accurate up to a quarter mile, you're not going to get the exact positioning you'd get with something like GPS. An application called BlackBerry Tracker has been offering such a service for the past year, and even lets you set up geofences that trigger tracking automatically when a phone breaches the invisible borders. With FindMe you might just have to call your phone and hope you're close enough to hear the ringtone (Note: we don't recommend you going vigilante against thieves of any sort).
Another thing to note is that the installation is not for the faint of heart. You'll need a jailbroken iPhone, minor knowledge of shell scripting, and some comfort with editing a few lines of code. You can find full instructions over at TUAW.