I haven't taken any kind of systematic approach at figuring it out, but I have noticed that some apps start from the beginning after a while of sitting unused. Take, for example, Plants vs. Zombies. If I reopen it after having recently played it, it will reload from where I left off. After about a day or so, though, it will load from the start screen. I've never checked to see if it disappears from the tray, though.
EDIT: I just checked, and the icon was burried pretty far back in the tray (I hadn't played it in a while) and when I opened it, it loaded from the start screen. So, to answer your question, I think the phone will kill apps from their "frozen" state but not remove them from the tray.