Yesterday (Leap Day), the Ajax Control Toolkit team released an update to the toolkit. This release comes in two flavors, one for the 3.5 framework (which has AJAX baked into ASP.NET 3.5) and one for the AJAX 1.0 release that is an add-on to ASP.NET. As always you can run through the live demos of the controls here. This release does not add any new controls, but does include a number of bug fixes and improvements, including a bunch of user-submitted patches (learn how you can submit you own patches).
My favorite controls in the Ajax Control Toolkit remain the AutoComplete, the CollapsiblePanel, and the TextBoxWatermark. I use this a lot in my applications. I would probably use more of the FilteredTextBox and MaskedEdit and ValidatorCallout controls if I weren’t such a fan of PeterBlum’s data entry controls, which have a great deal more features than the (free) Ajax Control Toolkit controls have at this point.