Prey’s a great tool, but don’t be fooled: it solves a different problem to the one I describe above. Prey (and similar tools) help to catch opportunistic thieves by giving you a way to “track” and remotely control your device, and in doing so dramatically helps in the fight against mobile crime.
However, it doesn’t provide any protection against a determined data thief, who can quite easily nick your phone and pull the battery out, or disable the data connections, or pull the SIM and disable WiFi, or just put the phone in a lead box. If it can’t get online or receive SMS messages, your device will never know it’s stolen, giving the attacker as long as they like to get the valuable data off the device.
Encryption, as I propose in the post, doesn’t save you from this, but it buys you time. A lot of time, if the encryption is strong and the password is long enough. Done properly, it can even buy you enough time that it’s no longer worth the attacker’s while to break it. Several years wait is probably sufficient to put off an identity thief, because there’ll be easier targets: if you’ve got highly-confidential secrets on there, you’ll probably want to aim for a couple of decades of protection – as always with encryption, there’s a risk management exercise involved.
But in short answer to your question: yes; totally install Prey. But also encrypt your storage.