Matt Gibbs recently posted about an update to the ASP.NET AJAX Script library that fixes functionality broken when trying to run ASP.NET AJAX-enabled pages in the iPhone's Safari browser when the 1.01 software update has been applied to a phone. He posts a step-by-step guide to using the scripts and explains what was changed in case you're interested.
http://blogs.msdn.com/mattgi/archive/2007/09/11/update-for-the-iphone-update.aspx