Okay, matter is mostly space. Matter that enters a black hole simply gets crushed to a point where there is no longer any space between the quantum particles (quarks, I think) that constitute matter.
There are also the warping of space to consider when mass density flux is high enough and you get a disturbing of the space-time continuum.
So, like Prego, it's in there, but packed in a fashion that is infinitely tight, so to speak.
Correct me if i'm wrong, but as far as i know, the matter inside a black hole doesn't get crushed but 'elongated' instead, like a spaghetti (due to diff in force that is applied on the different parts of the material that's put in it).
__________________
There are 4 possibilities: Either you know that you know or; you know that you don't know or; you don't know that you know or; you don't know that you don't know.
Not too sure about this but as I read in some article the problem we face is that under such conditions space-time is of a different order to the way we percieve it. At a quantum level you cannot use analogies to express what is happening because we simply have nothing which is similar at our level.
The way I try to imagine it is that, under the force of gravity inside the black hole, the black hole is pulling all atoms(or sub atomic particles)to the center or the singularity. If an atom makes it to "the center" then it is not at the center because the other atoms around it have also moved and thus the center is no longer in the same place. All the material which enters the black hole is still in there it's just jostling for position. We know that black holes vary in size so it is a natural asumption that the atoms which enter are there but these atoms are very much closer together than when they are outside the black hole.
This may be simplistic or even completely wrong but it is the way I visualise it in my head.