Still can be used.... for a short while.

My missus "left" her phone in a taxi in Leeds the other week, and between losing it, and it being blocked (automatically, kudos to O2 and their monitoring system), the taxi driver had managed to make about £50 worth of calls to Pakistan over the course of about 3 hours.

I wouldn't be surprised if a large number of stolen mobiles were used for overseas calls (hence untraceable), before being binned.