This page has a file upload. However, the form tag does not have both the enctype=multipart/form-data and method=POST attributes. The file will not be uploaded.Hmm... I thought about it a bit, and then looked at a normal page I had that had file upload controls on it. Sure enough, the form tag (there is always just one in ASP.NET) had the enctype attribute set automagically by ASP.NET if ASP.NET knew there was a file upload control on the page. Otherwise, it leaves it off. The Async update by the UpdatePanel was loading the FileUpload ok, but wasn't adding the enctype=multipart/form-data to the form tag attributes.
Solution: manually add the enctype to the page's form on Page_Load()
Page.Form.Attributes.Add("enctype", "multipart/form-data");
Source: http://blog.anofsinger.com/