Spatiotemporal patterns form in many nonlinear physicochemical or biological systems. Although unusual, microfluidic systems are no exception. We observe such patterns to form by colloids along the free surface of a drop beneath which surface acoustic waves propagate, and propose fundamental mechanisms to elucidate their formation. With increasing excitation amplitude, the colloids first assemble into concentric rings and then cluster into islands due to a combination of capillarity and surface acceleration. As the excitation is further increased, fluid streaming commences within the drop, inducing a transient metastable state in which the system alternates between colloidal island formation on the quiescent drop surface and subsequent erasure due to local vortex generation.