I'm not sure that using "I" is "formal" language necessarily. I would use "It was me" when I meant "It was me they arrested" and "It was I" when I meant "It was I who was arrested". The difference is in how "me" or "I" relate to the verb - an object, or a passive subject. Formality doesn't come into it, though I suspect that the frequently heard use of "I" where "me" would be better results from a misguided attempt to sound "formal".