If you own stock in a company delisted on nasdaq, what happens to your investment?

Scruffy,
Delisting is not as big of a deal as some would have you believe. What "happens" when a stock is delisted is that it is no longer eligible to trade on Nasdaq. Stocks become delisted for a number of reasons but the biggest ones are failure to file financial statements on a timely basis or failure to maintain minimum price and/or volume levels. From a fundamental point of view one of those is more important than the other. Failure to file financial statements is a big negative on a company because the investor is in the dark as to how a company is doing. Investors rely on regular and timely quarterly financial statements in order to monitor the health and progress of their investment. However, Sarbanes-Oxley (a law passed over 5 years ago by Congress in response to the original tech bubble) has made it much harder for companies to file financial statements on a timely basis. Why? Because now companies have to certify every penny and satisfy the auditors as to the internal controls of the company. While in general this is a good thing as it has decreased the chance you're getting fudged numbers, for smaller companies it can be quite a burden. Auditors can be a pain in the *** and create more administration than is necessary. Some of the tests and requirements being generated by Sarbox (as its known) can be overbearing, especially for smaller companies that do not have big accounting departments. However, Sarbox is good because it has raised the standards generally for reported financials for all publicly traded firms.
But I digress.
The other limitations about share price and volume don't concern me as much because they do not necessarily indicate a fundamental problem with a company. They just measure other investor interest. As I am a buy low, sell high kind of an investor, I actually like buying companies when their stock price is low and there is not much volume.
In fact, I have on occassion invested in delisted companies specifically because most delisted companies trade at some discount to regular listed companies. However, this is an extremely risky strategy and should only be undertaken if you have professional-level investment analysis skills. That being said, I've made some of my best investments by buying a company that I believe will only be temporarily delisted. Many companies can reattain listed status once they demonstrate compliance with the exchange's standards. (They refile new, better financial statements, etc...).
So, delisting is not the end of the world, but at the same time it is not a good signal for your stock either. Generally, I believe that stocks that become delisted will decline in value until they can regain compliance and demonstrate to investors that they are worth investing in again.