Asp.Net team has released new updated of MS Ajax library that includes (As ScottGu stated):

• Better Imperative Syntax: A new, simplified, code syntax for creating client controls.

• Client Script Loader: A new client-side script loader that can dynamically load all of the JavaScript files required by a client control or library automatically, and executes the scripts in the right order.

• Better jQuery Integration: All Microsoft Ajax controls are now automatically exposed as jQuery plug-ins.

You can read more about it here.

If you take a closer look you can see that team has released new small tool called Microsoft Ajax Minifier which can be used to reduce the size of the javascript files. Ajax Minifier has the following components:

• ajaxmin.exe – A command-line tool for minifying JavaScript files.
• ajaxmintask.dll – A MSBuild task for minifying JavaScript files in a Visual Studio project.
• ajaxmin.dll – A component that you can use in your C# or VB.NET applications to minify JavaScript files.

Other optimization tools that you might try:

- Telerik RadCompression http://www.telerik.com/products/aspnet-ajax/compression.aspx

- Microsoft Ajax Minifier http://aspnet.codeplex.com/Release/ProjectReleases.aspx?ReleaseId=34488

- MonoSoftware WAO http://www.mono-software.com/Pages/Web-Application-Optimizer.aspx

- Alachisoft nCache http://www.alachisoft.com/ncache/