Just this past weekend my wife lost her iPhone after stopping at a highway rest area. I knew from Find My iPhone that it was at the rest area, but there was no phone on the grass at the GPS point. Then the point moved to the far side of the parking lot. It wasn't there, either. It moved several more times, all of which led to the conclusion that it had to be inside - that despite claiming a location and even drawing an accuracy circle on the map, it was not where it claimed to be. I searched inside several buildings, had the attendants check the ladies' room (all the while using Find My iPhone to make the phone beep).
Finally, after over an hour, an attendant and I went out to the dumpsters in back, stuck our heads in, and heard it ringing. That guided us to the right bag, and lo and behold, there it was.
So yes, Find My iPhone was terrific in that without it, I would never have been able to recover my wife's iPhone. However, given what I went through in an otherwise relatively empty area, I can't imagine what one would do if the signal was coming from near a large apartment complex, a school, a parking garage, even a dense neighborhood of single-family homes could show the GPS point in the wrong location if the phone's inside. Sometimes it's just better to take advantage of the remote wipe feature and start all over.
I cannot, of course, defend in any way the use of police resources in this particular case. I'm sure we'd all want to help our kid out similarly, but I imagine the smart among us would have done it informally and off the clock.