From your markup EnableViewState="False" from datalist need to remove. Because datalist update event it is needed also make sure that viewstate is enabled for your page/site. By default it is enabled if you explicitly disabled it.
Next you need to check IsPostBack method in page load event.
if (!Page.IsPostBack)
{
DataList1.DataSource = mydata();
DataList1.DataBind();
}
If you do this then your update event will be fired and code run event handler that you bind with this event. I check and debug your code and found it is firing and if this is your only problem then it will fix after your code change.
But i found DataList1_EditCommand and DataList1_UpdateCommand same code and did not find any logic there. I guess that you shared with up are not real code.