Stolen iphone 5, in what ways can it still be used?

my iPhone 5 was stolen. It's erased and I have put a hold on my account. Can it still be used as an iPod and if so, why hasn't apple figured out how to disable the phone completely if stolen?  Makes me furious that my phone can still be used by a thief.

Thats what I thought.  I DID have find my iPhone turned on and watched it roam all over the city while trying to play detective…Thought maybe they realized it could not be used and it seemed to stay in one area for a long time so we checked all garbage cans and dumpsters in the area, then watched as they moved. Thats when I deleted all of my info and called AT&T to suspend my line and report it stolen.  I did not have the latest update bc I did not want to delete my entire phone to update it.  So wondering if they can still plug it in and download music…

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