Remember that the ASP .NET UpdatePanel is a very costly operation, sending back a significant amount of data for each request. I would highly suggest you use Firebug (this requires Firefox) or some similar tool to examine the exact content transferring to and from the server, specifically while you're performing an AJAX operation.
Also, you might want to look at ways to split some of these pages into multiple screens. Do you have to have a single DropDownList with 3000+ entries in it, or could you have a TextBox for users to search coupled with a GridView that contains paging? Is the DropDownList within the confines of the UpdatePanel or can you remove it and trigger a conditional AJAX PostBack? >From my chair it sounds like there are some decently fundamental design considerations that need to be addressed; now's a good opportunity to get the app in production shape! Alan http://www.twitter.com/anachronistic
