I live in a small resort town where the population in the off season is less than 1000 and during the peak season on major holiday weekends can swell close in the hundreds of thousands. A few years ago the local police department did this. They didn't use it for enforcing traffic laws or surveillance. Instead they operated as a normal cab, picking up fares, and would eavesdrop on people's conversations in the cab and use the intel they gathered to make arrests. In terms of arrests it did lead to some major drug arrests, but I think the entire program was marred in controversy that they stopped.
I saw one in NYC back in 2011 get a guy for what I think ended up being a stolen car. The cab started to go, then suddenly reversed and went around a median, coming head to head with a car. They then put guns to the driver and ordered him out. Only pic I could find of it: <a href="http://imgur.com/ObrYLBv" rel="nofollow">http://imgur.com/ObrYLBv</a>