How do you handle it if a character dies in a relatively mundane fashion? You might be able to take out one or two items depending on how you describe the death (e.g. a bashed in cranium might coincide with the destruction the character's magical helm), but most of the items would probably remain intact and functional.I personally rule that the items remain petrified also.
This is more for meta-gaming balance reasons. Players aren't intended to receive a huge boon of items as 'reward' for a PC's death.
Having the items stay normal would likely create less headaches with a creative group.
Having the items also petrify could lead to some issued when the PCs use that to either easily destroy items, hide them or otherwise render them unusable (if that becomes necessary in the course of the campaign).
Also, its "Flesh to Stone" not "Flesh and all items in contact with it to Stone".
Every Fantasy movie I have ever seen, the persons gear is turned to stone as well.