Yep, a guy in my office had his car towed - had 2 unparked City tickets and was getting a third ticket when they towed.
I also have used up my one free ticket as Adam describes.... for my current licence plate.
Another friend had a bunch of unpaid City of Vancouver parking tickets, the City had sent him a couple of nasty letters which he ignored. He went through a roadblock last year, the cops ran his plate and off to jail he went, with his car impounded. I bailed him out... ie., paid his outstanding tickets w/ penalties and the impound fee for his car - and he paid me back immediately. I think the total cost was around $800.