It's worth noting that the RTM bits of ASP.NET Ajax (formerly Atlas) have been released. I got the news first from Nikhil Kothari, but it's popping up everywhere...
I personally have only used Atlas on a number of projects. I have some serious issues with the framework as a whole, mostly stemming from the fact that I don't like the "update panel".
My preference for Ajax with ASP.NET has always been the fantastic AJAX.NET Professional Library. In addition, for whatever reason, I've been enamored with the Yahoo! UI Libary ever since it came out. And since then, Jack Slocum has done some AMAZING extensions to the library, which are an absolute must see.
More on my Javascript library preferences at a later date, but for now I'm off to download the Atlas 1.0 bits.