We've been using JSON as our AJAX payload since long before either term was coined, and yes, for in-browser manipulation it's definitely easier to work with for any data-related purpose.
Some people use an XML payload because they use XSLT to go to XHTML in the browser, and this has some apparent efficiencies to it until you realize that any customization of that XML -> XHTML pipeline has to be done in XSLT. Have you ever tried to write, eg, a date formatter in XSLT? It's essentially impossible, and so any such formatting has to be done as a separate JavaScript pass, throwing away all the apparent cleanliness and efficiency of using XSLT with an XML payload. I believe, although maybe Luke can correct me, that this issue is why TIBCO had to deprecate all their old grid APIs in their recent 3.2 release when they added Firefox support.
However, bigger picture, payload format is not that important when you have a client-side framework that supports high-level, SOA-style databinding. In SmartClient we use XPath-based binding to either JSON or XML payloads; the XPaths act on the JSON data in a manner similar to JXPath expressions on Java objects.
These two examples bind a grid and form to the Yahoo Image Search service, one in XML format and the other in JSON format. They differ in one property.
XML Binding
JSON Binding
These examples are mini-applications; if you want to see the same pattern in less code just look at the adjacent "JSON XPath Binding" example.