I agree about being wary and trusting one's instincts, in addition to putting together all the clues you can in a given situation. In this situation I would also have been creeped out.
I also think that instincts cross borders and cultures, and that we need to remain calm but alert, acting on our fears when appropriate. The op and her dh did just fine in this case, IMO. I live in Europe and one of the reasons I enjoy living here is that the general level of over-the-top panic about crime is much less. (The actual crime rates in our town are very low, too.) The nightly news doesn't give you the impression that there's a child stalker around every corner. Kids (fourth grade and older) walk to school by themselves and don't live in constant fear.
Regardless of all this, my dds and I had a similar experience a couple of months ago. We were on vacation in a town that we go to every summer in Germany. (I speak German well but my kids only know a few words.) This town is not very large; it's a small urban center in a very rural part of Bavaria. (What this means in practical terms is that any foreign immigrants to the area will be in town, not out in the farm villages.) On this particular day we went looking for a big playground some German friends of ours had recommended to us.
I was alone, obviously pregnant, with my two girls, because my dh went book shopping while we went to the park. It was a nice, sunny, day, but there weren't many kids around because their schools were still in session. The playground had lots of trees and hedges separating one part from another, so you couldn't see very far in any direction. We found an area with a massive climbing apparatus (ropes and platforms) and both girls (wearing dresses) jumped on and starting climbing with glee. I sat on a nearby bench.
After a few moments I noticed a man standing behind a tree near my bench. He was standing so that I couldn't actually see him without moving, but when I did, I noticed he was taking pictures of the play area with a digital camera. Immediately I asked, in German, politely, "What are you doing?" He stammered, blushed, and answered in very broken German. (I could already tell he was a foreigner by his appearance, but I never assume anything based on that.) We had a conversation in which I became increasingly aggressive and he increasingly nervous (he was completely unable to give me any answer about why he was there or what he was doing taking pictures). I took out my cell phone and he immediately left.
In the meantime the kids had noticed him and they didn't like him, either. Once he left I figured we were all right, but strangely enough another foreign man came up about 5 minutes later and sat right down on my bench (there were several he could have chosen) and said "hello," again in heavily accented German. I said hello and waited. He just sat there (watching the kids playing). By this time another mother and her children had arrived and were sitting on the other side of the play area, so I felt more relaxed. But my kids started feeling creeped out and wanted to leave, so we did. (This is unusual for them; we don't watch TV and I don't scare them with abduction stories.)
At that point he got up and followed us along a parallel path so that trees blocked our view of him but we knew he was there. This was very freaky and I got out my phone again. I instructed the kids to hold my hands and to walk with me wherever I went, and not to point out our car if I decided to walk past it instead of get into it. We went to the parking lot and he was still watching, now with his phone out talking to someone else. I could barely see a guy at the end of the lot, who I think was the first man, also talking on his phone. I was planning a way for us to get into our car quickly when my dh arrived, having finished his shopping. The two men melted away instantly, and we got in the car with great relief and left immediately.
This whole episode was so strange that dh and I tried to make sense of it, and we couldn't really come up with any innocent explanation (although dh wanted to believe that I was overreacting). Later I was sorry I hadn't actually called the police, simply because I don't want those guys loitering out there waiting for more prey.
So I disagree with posters that say it's overreacting to call the police. If they interview a few innocent people but also catch someone whose motivations are not so benign, it's worth it, isn't it? And wasn't it right for me to trust my children's (and my own) instincts and act to protect them, rather than tell them to just shrug it off?