If it's before Mao's death, there's no way the PRC falls and magically turns into a democratic republic (a really democratic one, not a Democratic People's Republic one). Regime collapse equals state collapse. We're back to the 1920s. Not fun all around. Chiang now has a chance to gradually retake the mainland for the second time. It will be far more difficult than when he did in the 1920s/30s, in part because of the loose nukes.
If it's during the 1980s or even 1990s (suppose Zhao Ziyang gets his way during the Tiananmen Square protests), there will be a period of instability. At this time, Chinese identity was still quite strong in Taiwan. Assuming central government remains in business, they'll make an agreement to some sort of confederation. Though it's quite possible that a Putin-style strongman takes power in Beijing after a decade, especially if the post-PRC state is weak and/or corrupt.