Rach21roo:
You've posted your question in 'Technology' but I'll respond as if it was posted in 'Law':
Section 2 of the Theft Act 1968 states:
"A person’s appropriation of property belonging to another is not to be regarded as dishonest . . . if he appropriates the property in the belief that the person to whom the property belongs cannot be discovered by taking reasonable steps".
So, having 'tried to trace the owner' (as per your post), you're probably legally in the clear. However it's possible that a court might rule that (since a person who has lost a phone might report that fact to the police) you hadn't really tried to trace the owner if you failed to report your find to the police. However, simply doing that carries its own risks!
http://www.dailymail....D-handing-police.html
Chris