There are three kinds of Google Labs projects: those that will continue to exist as standalone products, those that will become features and those that will be discontinued. Google Labs will no longer exist and it's sad to see so many useful services disappear.
Google Scribe will continue to exist as a Blogger feature, but you'll only find it in Blogger in Draft right now. Scribe will probably be added to Google Docs, Gmail and other Google services.
Google Squared will be discontinued next month, but the technology will continue to be used in Google Search. "As part of phasing out of Google Labs, Google Squared will be shut down on September 5, 2011. Any saved Squares will be deleted. We will continue to use Google Squared technology to improve search, as we have already done with question answering and related searches. We hope that you have enjoyed using Google Squared as much as we enjoyed building it," explains Google.
Another cool service that will be shut down is Image Swirl, a clever way to organize image search results and find related images. "We will continue research on innovative methods to organize and navigate images as part of Google Images," promises Google.
App Inventor, the service that allowed you to quickly build simple Android apps, will be discontinued as a Google product and will be open sourced. "Because of App Inventor's success in the education space, we are exploring opportunities to support the educational use of App Inventor on an open source platform. As a result of these changes App Inventor will be available through the end of the year but users should expect the current App Inventor URL, appinventor.googlelabs.com, to change sometime in the next 90 days."
Google still has to decide if Code Search, Google Mars, Google Sets, Google Moderator, Shared Spaces, Aardvark, Google Body, Google Correlate, Google Transliterate or City Tours will continue to exist. I suspect that most services will disappear or they'll be open sourced.
Google Labs was the place where you could find small tools that solved interesting problems. Google Sets will never be a full-fledged Google service, but it's a very useful tool for generating lists of words from a category. While the Google Sets technology will continue to be used in Google Search, it's likely that Google Sets will no longer exist.
"At Google, we believe in launching early and often and Labs takes that philosophy to the max. The projects in Labs are intended to showcase some of our cool and wacky ideas but are not intended to be full-blown Google products. Labs experiments may be unavailable or be even removed without notice and you may not be able to access any of your data. We recommend that you not use sensitive information in a Labs experiment. Google Labs is our playground. We try to keep it safe and orderly, but still keep it informal and, above all, fun." (Google Labs FAQ)
Google will continue to launch experimental features, like Hotel Finder, but they'll be integrated into bigger services instead of stagnating in Google Labs.