Is it possible that Lost mode for my phone was deactivated by a thief?
They could just have to phone turned off. Although if your phone is logged into itunes, it's POSSIBLE (with forensic software or more knowledge than most iphone thieves) to get your itunes user and password and then of course they could turn it off. However, I think it is an easy thing to determine if someone else is logging in with your credentials, so I'd be willing to bet that they just have the phone turned off.