It's not clear either way. Ask your GM. Personally I rule it on a case by case basis. Shield strapped to your arm? Sure, keep it. A weapon held in a normal fashion? Nope, dropped. A holy symbol? Probably, most people keep it on a chain around their neck.
Use some logic and ask your GM what they think. Realistically speaking people more frequently drop things when they go unconscious, but it's certainly not unheard of to keep a grip.
Eh, I disagree. I see no problem letting GMs handle little nuances in the rules like this. Especially when the situation, like a side, can realistically go either way.
I'm fairly sure Paizo at some point said they don't define some things because the dictionary defines them well enough.
Unconscious
Unconscious creatures are knocked out and helpless. Unconsciousness can result from having negative hit points (but not more than the creature's Constitution score), or from nonlethal damage in excess of current hit points.
If you look at the text here, it's more concerned with telling you what circumstances would bring a character to the point of "unconsciousness" than about telling you what that condition does. In fact, the only thing it does explain is that being "unconscious" also gives you the "helpless" condition.
They don't need to define "unconscious" any more than they need to define "and", "can", "from", or "excess" (or any of the other words in the text).
For the record, if a person falls unconscious in real life they lose the ability to control their skeletal muscles. Sometimes they move those muscles while unconscious, but these movements are either involuntary (epilepsy etc), or a response to internal stimulus (talking to someone in your dream), rather than external stimulus (holding onto your sword so you can get up faster when you wake up).
While unconscious, the default assumptions would be:
1. You fall prone.
2. You drop everything held.
2a. Anything held in place (shield strapped to your arm etc) would stay held in place.
If you want to house-rule it, you could have them roll for "luck" when they fall to see if they hold their weapon. Another thought is that when they wake up, their weapon is likely right near their hand, so you could rule it a swift (or even free) action to "draw" their weapon since it's so close at hand (probably the best way to keep the game moving).
The Unconscious condition doesn't specify that creatures fall prone, but this can usually be ruled with sensible consistency.
On the other hand, I can picture holding onto or dropping items. A person dropping things due to the force or shock of being knocked out is common, but a warrior still clutching their weapon as they fall isn't far-fetched.
A character getting healed back to consciousness during combat isn't too uncommon, and whether they still hold their items can make a significant difference. One way can allow them to rise from prone with a move action and contribute a standard action that turn, while the other can see many characters needing to "collect themselves" with 2 (or more) move actions and be unable to help until next round. As the situation seems likely to come up and likely to matter, I think an official ruling for consistency (or clarity) would be useful. If you agree, please feel free to FAQ this.
Generally I've seen that the basic scenario for bringing an unconcious character back into combat is to simply let them come into play the next round. If he wants to spend time picking up things he's dropped, it's his lookout.
