That's a good question. Some of it gets stored away and re-purposed elsewhere (such as props for HHN haunted houses; remember that blue police car from Kongfrontation?). Some of it gets destroyed in the demolition (there are pictures of the Jaws boats remaining on the track during demo, and at least one of them falling over onto its side) or otherwise trashed.
I'm more curious about the stuff that actually goes home with people. For example, for a lot of Disney related stuff (props, costumes, ride vehicles), Mouse Surplus in Orlando used to have a warehouse filled with tons of stuff, and one could spend a day hunting through it all.
Times have changed, and we live in a day of anticipated sentimental value. People actually think about preservation nowadays, and the topic is even featured in tv shows like Hollywood Treasure and other pawn/picker type programs.
I don't know for sure what has happened to the props/vehicles in the more recently closed attractions like Jaws. I would like to think that efforts were made to preserve at least some parts of it. But if you watched the rapid progress of the demolition, it appeared as though Universal's priority was time, and not preservation, and there were at least some things destroyed in the demo that I would like to have seen preserved, and even sold or auctioned off.
They kept security pretty tight, and even monitored the massive trash dumpsters to make sure team members weren't walking away with their own attraction mementos.
At the end of the day, the whole thing is really quite sad.
