Will "Find My Iphone" work without wifi connection? For instance, if someone were to steal my iPod they wouldn't be able to connect it without my passcode on the lock screen. And if they can figure out my passcode, what if they don't connect it to the internet? Would the app still work?
Nope. Find My iPhone feature requires internet connectivity to be activated. If your iDevice is stolen, you can flag it as stolen and set up a remote wipe from icloud.com. Next time it is connected to a WiFi or to iTunes, it will check icould and be disabled/wiped.
If it never connects or they wipe it before connecting, there is no way to track it.