I had a similar problem and found the way that worked best was to rely on Event Bubbling and event delegation to handle it. The nice thing about event delegation is that once setup, you don't have to rebind events after an AJAX update.
What I do in my code is setup a delegate on the parent element of the update panel. This parent element is not replaced on an update and therefore the event binding is unaffected.
There are a number of good articles and plugins to handle event delegation in jQuery and the feature will likely be baked into the 1.3 release. The article/plugin I use for reference is:
http://www.danwebb.net/2008/2/8/event-delegation-made-easy-in-jquery
Once you understand what it happening, I think you'll find this a much more elegant solution that is more reliable than remembering to re-bind events after every update. This also has the added benefit of giving you one event to unbind when the page is unloaded.