Arresting officers frequently attempt to get a suspect to cooperate after an arrest. One way they do this is by telling the suspect they can "work off" their latest arrest by setting up others for a bust. Three seems to be a fairly common number.
As to whether it's true that the police can promise to dismiss your case: There is a difference between not filing a case and dismissing a case. Police officers investigate crimes and make charging recommendations to the prosecutor. Final charging decisions and plea deals are up to the prosecutor, not the police. The police cannot make a binding promise of a specific outcome once a case is filed.
So, while the police might promise they won't notify a prosecutor about your arrest and thus no charges will ever be filed, that's very different than an offer to dismiss your case. Once charges are filed, any dismissal or deal is up to the prosecutor, not the police. A prosecutor may give great weight to an officer's opinion, but he or she isn't bound to follow it. If the officers are promising not to take your case to the prosecutor and charges will never be filed, you still should be very concerned about what kind of guarantee they are giving you.
So, yes, any agreement should be in writing. Otherwise, if something goes wrong or the police fail to uphold their end of the deal, it will be your word against that of the police officers. You will face an uphill battle, to say the least, in winning that credibility contest.
Your best bet is to consult with an experienced criminal defense attorney who can advise you first and most importantly as to the strength of the state's case on the new arrest. If your lawyer believes a court would rule the arrest was invalid or that you have some other defense, there may be no need to cooperate.
If your lawyer believes the new case is strong, he or she can guide you through the cooperation process by getting a binding agreement from the police and the prosecutor and making sure that your obligations under it are specifically laid out. Does your cooperation only require you to assist police in making an arrest or does the person you set up have to be convicted? How long will this take? Will you have to testify in court against the person you set up? And most importantly, will charges be filed against you and dismissed or not filed in the first place? Can they guarantee a probation revocation won't be filed based on your new arrest? What actions on your part would result in them retracting the agreement?
Being charged with a drug sale while on probation is quite serious. The police are not your lawyer and they don't have your best interests at heart. Your safest and best option is to retain counsel whose only goal is to protect your rights under the law.
-- Jeralyn Merritt