At present, ASP.NET AJAX is a fine library, in and of itself. The ability to
drag and drop things is great. But, there is a caveat. If you intend on
heading to ASP.NET MVC, you have to really kludge things up to use ASP.NET
AJAX. This is at least true in the current CTP ... and may not be in "ber"
when it is released (according to team blogs, it will be released in a month
ending in "ber" - aiming for Septem-ber, but it may be as late as
Decem-ber). There are good tutorials on using JQuery with MVC today.
If you are not using MVC, either option is fine. Overall, I like the speed
of development with ASP.NET AJAX, esp. with the Toolkit added to it. It has
a lot of neat control extenders that you can use to adorn your ASP.NET
Server controls to get some really great effects (accordian, always in place
hover layer, date picker, etc.). You can have them up and running in just a
few minutes after a brief learning exercise.
I am not trying to discourage JQuery, by any means. It is a great library
with a lot of support. There are a couple of books on the market to help you
get up to speed.
Another decent option, which is also open source, is the Yahoo User
Interface Framework (YUI). It has a lot of controls included, and can work
in a variety of languages and paradigms, as it is pure client side goodness.
Now, one thing you should realize, is the more you put on the client, the
more likelihood you will get into a corner you can unpaint yourself from.
Some client side libs clash with each other. This is less likely with OO
style JavaScript libraries, of course, but there is a danger you will use
more than one library and end up butting heads. The answer here is to choose
and stick with it.
Have fun!