UK Law
If somehow you were to be tracked down by the 'authorities', if this guy reports his phone as stolen, there would be CCTV of you picking it up off the bus and you could potentially be a subject for Her Majesty's pleasure!
Best thing to do, hand it to the police, if the guy has any sense he'll head to the police station near where he got off and get it back.
The UK has a 60 or 90 day policy and it's yours. Better to wait 60/90 days than end up potentially getting a criminal record (far fetched, but potential).
Plus, if one of my friends, or my girlfriend told me they had found a phone, and didn't want to hand it in, even if the guy was an idiot, I'd had a few trust issues with them
Just my opinion, but:
Before taking it to the police station, you should send a text back saying: "Hey sweetie, it is Grandma here, thanks for keeping the noise down these past days. I've handed your phone the the police, go get it, then keep the noise down. No-one wants to hear about how you try and get girls (in your dreams). Love Grandma (from the Bus) xxx"