Unlike previous version of .NET, .NET 3.5 has AJAX built into it. With earlier versions of .NET you could download ASP .NET AJAX 1.0 as a seperate download. ASP .NET AJAX 2.0 is included with the .NET 3.5 download.
The AJAX Control Toolkit remains a seperate download. The AJAX Control Toolkit team has rebuilt the Control Toolkit to target ASP .NET AJAX 2.0. It is available for download here.
For information on how to add the AJAX Control Toolkit 3.5 to your toolbar read this post.