Who put up the $5,000 bounty? The finder?
No, he offered the phone to several organizations (including Wired and CNET, reportedly) for "financial compensation". Gizmodo is the only one that bit.
He did so several weeks after the phone was found. If he did indeed make the attempt to return the phone and was rebuffed (and can document it), then it appears that the phone became his -- at least from what I can tell from CA law.
Was it a good idea to offer it to someone else for money? No, I don't think so. Was it illegal? Not according to the letter of the law -- if he can document that he tried to return it. One can make the case that he didn't try hard enough, but the law simply says "reasonable and just efforts", not "exhaust every possibility".
Should Gizmodo have paid the money? No, I don't think so. And even if they hadn't, should they have dismantled it? No, I don't think so, either. What Gizmodo should have done was offer to return the phone to their contacts in Apple (they've apparently been given early access for reviews of Apple products in the past).
But, was anything they did illegal? I'm having a hard time finding the rationale. Once the original finder made the attempt to return it and was rebuffed, I believe became his property with which he could do as he wished -- including selling it to someone else.