Is there an alternative to Find my iPhone to track a lost/stolen iPhone with SMS support? I bought an iPhone 4 recently. I've been using Find my iPhone but I find it a little limited. 

First, you need to have Wi-Fi or 3G to be able to deactivate or send a message. That consumes a lot of battery. Second, if you have only 3G enabled (which seems to be a more viable solution), the accuracy isn't that good. I've done some tests and it has detected my phone 100m away from where I am. And finally, if none of those are on, you can't lock your phone with a password, otherwise whoever has it won't be able to turn Wi-Fi or 3G on.

A friend who uses Android told me about LostPhone, which is capable of doing all the lock and alert functions by SMS too. I dug a bit and found FoneHome and TapTrace, but none of them seem to be SMS capable.

Does anyone know a solution to this?
If you lose your phone or it is stolen, it is likely to be miles away from your home and just knowing this allows you to use the 'Find My iPhone' feature on www.me.com to remotely wipe (and/or kill) the phone, or to make it bleep and put up a message if you realise you've left it at your friend/family-members' house.

An SMS-based app would require you to have another phone to find/lock/wipe your iPhone, plus there's always the chance that you forgot to run the app following a reboot, or that it crashed.

"Find My iPhone" is built into iOS, so you don't have to remember to run it.

Although 3G does use up more battery than 2.5G or 2G, this is not the primary cause of battery drain in a smart phone - try quitting some your apps to find out which one is draining the battery.

Also, read through the comments on the link you posted - there are some real unhappy users there who post about the problems. I wonder how many Android phones are out there that somebody could SMS-spam with the magic command to remotely-kill their phone....