Polymorph Other

I can't remember how this spell works..

1. If I polymorph someone, do their items stay when I slay the squirrel? Or are they lost like Disentegrate?
2. If the items stay, then why don't people use the spell more? It is a "instakill" spell as they are pretty much harmless as squirrels.
3. Are most enemies immune? Or do they just have a insane save vs polymorph?

From what I remember, it never really worked that well vs anything