Some police forces still have mounted officers. This makes sense for park rangers (in some terrains, a horse is still way more efficient than a vehicle - and on a related note, the Denali rangers still use dog sleds). But on the city streets, it might seem that horses are, well, an old fashioned liability.
Police horses are used on the mall in Washington DC, on the streets of London, even in Los Angeles (mostly in parks). What's the value of a horse for policing?
First of all, in parks and rough terrain, being on a horse gives you a much better view than being on foot or even on an ATV. The horses tend to attract positive public attention and help the image of the police.
The other reason is that horses are one of the best weapons for riot control there is. A mounted officer can easily break up or scatter a crowd without anyone getting hurt (the horses are specially trained to be able to step or jump over downed people without touching them). Many forces use only large horses (and some only horses of a specific color). Oh, and people don't like to hurt horses - which often makes suspects back down.
Horses are also highly visible in a crowd situation.