The plan is to have every asp.net control that we ship to work inside UpdatePanel by the next release of ASP.NET. However, it is still being discussed if it is possible to support WebParts (in particular) for Atlas 1.0 RTM.
In the case of FileUpload, there is a limitation that prevents sending the file through XmlHttpRequest. So, in order for the file to get across you would need to perform a full postback. Note that you can make use of the PostBackTrigger to mark a button that is inside of UpdatePanel to do a full postback, instead of an asynchronous one:<asp:UpdatePanel ID="UpdatePanel1" runat="server">
<ContentTemplate>
<asp:FileUpload ID="FileUpload1" runat="server" />
<asp:Button ID="Button1" runat="server" OnClick="Button1_Click" Text="Upload File" />
</ContentTemplate>
<Triggers>
<asp:PostBackTrigger ControlID="Button1" />
</Triggers>
</asp:UpdatePanel>
Hope it helps,
Federico