In my classroom, students had a tendency to only use settings that they were familiar with (school, home, the ball field... wherever they spent a great deal of time).  In order to remedy this problem, I looked for ways to challenge them to stretch their minds beyond the normal.  I have included a couple of ideas on how you may challenge your students to do the same.
 

1. One idea was to have students give ideas orally for the setting, and to write their ideas on the board.  I then added some of my own, such as the desert, the basement of a rundown apartment house, an island in the Pacific ocean, the slopes of Mt. Everest, an abandoned castle...
Once students have offered their creative ideas, have them get a sheet of paper and a pencil out!  Their job is then to pick one of the suggested settings, draw it, describe it, and come up with a plot or mystery that could take place there.  For example, in the desert, you could have some kids who are searching for the cactus water thief!  Challenge them to get creative and not focus on finding a killer or a typical thief.  You may want to have them pick one of the settings out of a hat, or even to assign them to students (whichever you feel suits your students best).
Once they have finished their ideas, have them share their creativity with the rest of the class, and then develop the setting for their mystery in greater detail.

2.  Another idea would be to divide the class into groups and give each group a picture of a place.  These pictures could range from haunted houses to tropical beaches.  With each picture, have students write a description of the environment and then brainstorm a couple of ideas for a mystery that could take place there.  When all of the groups are finished, have them read their description of the setting without showing the group the picture or telling them exactly what it is.  See if the rest of the class can figure out their picture based on the written description.
When they have finished with this, have students begin developing the setting for their own mystery.  Challenge them to be descriptive, yet creative with their mystery.  You may need to set guidelines in order to encourage them to be creative. For example, choose a setting other than your school or your house.