google play store - 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.