The phone can only be tracked when it is connected to the internet, either by wifi or your cellular data network, and only if you have set up iCloud and Find My iPhone on the phone before losing it. I don't believe erasing the phone will delete your photo stream, which should remain in iCloud along with your other iCloud data. If your carrier blacklists the phone from their network, a theif could probably still jailbreak it to unlock it so it would work on another carrier's network. If you erase the phone, it will erase all your data and settings so it could no longer be tracked. This is something you do if you're pretty sure you aren't going to get it back and/or you are more concerned about someone gaining access to your data than you are getting it back. Of course, the remote erase command can also only be executed when the phone is connected to the internet; if it is never online again, the phone won't be erased. There is more information on this here: http://help.apple.com/icloud/#mmfc0ef36f.