Sexting - Is your child doing it?

I recently wrote about the growing phenomenon of teens texting nude pictures of themselves to others. It’s led to school districts creating policies about what they can do with cell phones if students violate rules about having them in school.
Can schools look at a student’s confiscated cell phone for no other reason than it's in a principal's possession? Should they?
The issue is not just what schools should do, but how parents, and others should deal with the possibility of teens doing this. One parent told me that in her generation a girl may take a picture like that show it to a friend or boyfriend, but it never went any further than that. Now, these pictures are making the rounds.
What should schools do? What about the police? What about parents? What about teens?