Can application upgrades happen automatically, even if you have it turned off in marketplace? I thought I had turned off all the automatic upgrades for the apps on my phone (T-Mobile G2 w/ Froyo).

However, yesterday, I got a notice that said that I had new GMail and described the new features.

I checked GMail, and I did have the new 2.3.5 version.

Then I checked Android Market, and it shows "Allow automatic updating" as unchecked.
I believe that Google can and will update their system apps like Gmail, Market, Search and Youtube (I think that is still system app).

There have been plenty times that the Market updates itself, without any interaction from the user. I have not seen them actually update anything automatically, except the Market, but if you have a "with Google" phone, I am sure there is some blurb somewhere that says they may update the applications without you knowing, or something.