This question seems to come up alot on NSG.
Here is a very well made video on the exact thing to do in certain police encounters. Now, I know that every single encounter is different, but there are certain things you can do to save your ass. The video is fairly long but worth it. The part when they are in the car and get pulled over is especially interesting. This shit seems to happen all the time and just about everyone I know who got in trouble with ganja in their car could have possibly saved their ass by watching this video.
http://video.google.com/videoplay?docid=8520847761350501823&q=police+encounters