After water bottles are "recycled" where do they go? Here's the article which companies the audio clip from NPR on the life of a water bottle (article from 2007, the numbers may be a bit outdated).
Plastic bottles can't be recycled forever because the PET plastic does not keep its quality after being reheated multiple times. Instead they are ground up into flakes or fibers used in a number of different products from carpeting to clothing, most being produced in China. China is one of the largest consumers of the United States' old plastic. After they are made into carpeting, for example, the product can not be recycled again.