This may be caused by not having resource quota on the site collection where the sandboxed solution is. Check by accessing SharePoint Admin Center, and see if you have resource quota for that site collection. Check in the list of site collections or the property page:
If you have resource quota for your site collection, then you may be using the Update panel the wrong way?
Logically updatepanel should not be related to sandbox solution and it should work in sandbox environment. When you don't the updatedpanel added automatically then check the master page you are using under the hood from sharepoint. The updatepanel should be added in masterpage. So you should not add the update panel in your control. When you can't find the update panel added, can you check what's the mater page is. You can check the mater page from properties like page.Masterpage.
Ref: Is UpdatePanel supported in sandboxed solution?