How to use update_page to dynamically add form elements?

I've got a form with some upload boxes, and I'd really like to add more
boxes when the user clicks on a link, a la Gmail attachments.
<%= link_to_function 'add another song',

"link_to_function" is the right way to do this.

2. Instead of making this inline, make this true AJAX, and a ruby
variable can be incremented on the remote side.

Refer to this excellent screencast which does something similar to
what you are trying to do.
You are right. Making a round trip to the server using Ajax is
overkill for adding a form element.