As an early Christmas present along side the iOS 4.2.1 update, Apple has made the Find My iPhone feature of the $99/year MobileMe service free.
Apple descrbes Find My iPhone (or iPad or iPod touch) on their website as the following:
Find My iPhone, iPad, or iPod touch — the MobileMe feature that helps you locate your missing device and protect its data — is now free on any iPhone 4, iPad, or fourth-generation iPod touch running iOS 4.2.3 Once you set it up, you can find your lost device on a map, display a message on its screen, remotely set a passcode lock, and initiate a remote wipe to delete your data. And if you eventually find your iPhone, iPad, or iPod touch, you can restore everything from your last backup.
You can download the MobileMe Find My iPhone client for iPhone/iPod touch/iPad from the iTunes App Store (iTunes link).
Once you have the Find My iPhone client installed, check out Apple’s easy to follow setup directions for iPhone, iPod touch, or iPad.