It's not right or wrong. You should speak with an experienced criminal defense attorney to determine what is in your best interest. A drug paraphernalia charge can be disposed of in a first time offenders program and even if its not your first criminal case, there is no license suspension and most likely a probationary sentence.
This question can not be answered in a public forum like this. Do not do anything before retaining an attorney. If you can't afford one, contact the local public defender organization. Under no circumstances should you deal with the police directly!
There is nothing illegal about the police action you shared in your story (though you should speak with an experienced defense attorney who may develop the facts further and find something). As the others said, you should discuss this with an attorney to determine whether you are more afraid of these charges (which likely result in probation) or the work you will be asked to do.