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I pokémon Heart Gold they said that the pokémon were made into electrical information then stored. That would mean it's basically like teleporting (which is possible too in pokémon ); the computer (they pokéball) scans you and saves the information, then it "deletes" your atoms and when you need to get out it reconstructs you using this information. Which is why there is a red flash when the pokémon comes out; it's pieced together again. The pokéball is just a computer that stores and reconstructs/deconstructs your pokémon. That's also why it's possible to store pokémon in pc-boxes. To me that's rather creepy; they actually go into non-existence for a while. Just think about it...
I have a feeling that the Pokeball records the Pokemon's "data" like memirores and such, turns it into a bunch of atoms, then remantles you again Maybe energy as well because of the red beam that comes out in Anime.
LollllOh man when i saw this thread i could'nt, I resist posting this vid xD
To me what happens to the Pokemon inside of their Pokeball is that they are trapped inside of a world of hate and torture where they cannot do anything but wait until they come out summoned by their masters Haha Just kidding XD I think that it is quite varied