A, "why I didn't see that before?", popped into my head thanks to:
He discusses the concept of the Update Panel. When you are doing a simple update inside the panel, you have to remember that it acts like a refresh but only returning the necessary data to that panel. This is obviously a huge load on the server.
Instead try using the web service method with the AJAX library to get a cleaner result.
I'm more of the old school ASP.Net 2.0 where I'm use to the asynccallback method. In thinking that the update panel was a simpler, quicker solution was nice though, but this just makes more sense.