@Frinavale
You're entirely correct. The UpdatePanel posts the whole page via an asynchronous javascript call, and the entire page life cycle is processed. The page is then rendered and sent back to the client where the javascript's callback pulls the html/script that is contained within the <ContentTemplate> tags of the received XML and replaces the data displayed on screen with it.
So as far as the server is concerned, if the postback occurs from an UpdatePanel or is an entire page postback, it's the same. It's just that the javascript handles it differently on the client side.
If you write your own javascript that contains an AJAX call however, you could have it call to a webmethod that just processes received data which could be as much or as little as needs to be posted to the server. It processes that data and passes back just the data that the AJAX call requests at which point, the javascript callback can do whatever you want. In this case, find the object in the document and replace its value, rather than replacing a whole block of html.
This way is much more efficient in terms of network and processing, but is a lot more intensive for the programmer...
Of course, wrapping every object with an UpdatePanel adds to the amount of processing the server needs to do in every case. It still needs to convert the XHTML to HTML and handle the viewstate etc etc etc...