My advice for dealing with Kim... drop her like a bad habit. If she's that naive and oblivious about what a douche her boyfriend is, she probably isn't that good of a friend / person.
For non-harsh advice, I would recommend e-mailing her with your side of the story and telling her that you really don't want this to come in the way of your friendship (you guys have been friends for so long, you have so many fun memories together, etc). If she doesn't respond or try to make an effort, then just forget it. If you take the high road and she doesn't reciprocate, then no one can blame you (not that they can now, but they really
have no ground to stand on if you do this).
That's really horrible, I'm so sorry. I hate it when people aren't respectful of other people's property... I mean, what the hell is that guy's problem? File a police report for stolen property, he'll start looking for a replacement phone pretty quick...
Also, don't let this affect your housing plans. Not worth it.