in a "using" block is a SqlConnection closed on return or exception?

Question

1. Yes
2. Yes.

Either way, when the using block is exited (either by successful completion or by error) it is closed.

Although I think it would be better to organize like this because it's a lot easier to see what is going to happen, even for the new maintenance programmer who will support it later:

using (SqlConnection connection = new SqlConnection(connectionString)) 
{    
    int employeeID = findEmployeeID();    
    try    
    {
        connection.Open();
        SqlCommand command = new SqlCommand("UpdateEmployeeTable", connection);
        command.CommandType = CommandType.StoredProcedure;
        command.Parameters.Add(new SqlParameter("@EmployeeID", employeeID));
        command.CommandTimeout = 5;

        command.ExecuteNonQuery();    
    } 
    catch (Exception) 
    { 
        /*Handle error*/ 
    }
}

Yes to both questions. The using statement gets compiled into a try/finally block

using (SqlConnection connection = new SqlConnection(connectionString))
{
}

is the same as

SqlConnection connection = null;
try
{
    connection = new SqlConnection(connectionString);
}
finally
{
   if(connection != null)
        ((IDisposable)connection).Dispose();
}

Edit: Fixing the cast to Disposable http://msdn.microsoft.com/en-us/library/yh598w02.aspx

Here is my Template. Everything you need to select data from an SQL server. Connection is closed and disposed and errors in connection and execution are caught.

string connString = System.Configuration.ConfigurationManager.ConnectionStrings["CompanyServer"].ConnectionString;
string selectStatement = @"
    SELECT TOP 1 Person
    FROM CorporateOffice
    WHERE HeadUpAss = 1 AND Title LIKE 'C-Level%'
    ORDER BY IntelligenceQuotient DESC
";
using (SqlConnection conn = new SqlConnection(connString))
{
    using (SqlCommand comm = new SqlCommand(selectStatement, conn))
    {
        try
        {
            conn.Open();
            using (SqlDataReader dr = comm.ExecuteReader())
            {
                if (dr.HasRows)
                {
                    while (dr.Read())
                    {
                        Console.WriteLine(dr["Person"].ToString());
                    }
                }
                else Console.WriteLine("No C-Level with Head Up Ass Found!? (Very Odd)");
            }
        }
        catch (Exception e) { Console.WriteLine("Error: " + e.Message); }
        if (conn.State == System.Data.ConnectionState.Open) conn.Close();
    }
}

* Revised: 2015-11-09 *
As suggested by NickG; If too many braces are annoying you, format like this...

using (SqlConnection conn = new SqlConnection(connString))
   using (SqlCommand comm = new SqlCommand(selectStatement, conn))
   {
      try
      {
         conn.Open();
         using (SqlDataReader dr = comm.ExecuteReader())
            if (dr.HasRows)
               while (dr.Read()) Console.WriteLine(dr["Person"].ToString());
            else Console.WriteLine("No C-Level with Head Up Ass Found!? (Very Odd)");
      }
      catch (Exception e) { Console.WriteLine("Error: " + e.Message); }
      if (conn.State == System.Data.ConnectionState.Open) conn.Close();
   }

Then again, if you work for EA or DayBreak games, you can just forgo any line-breaks as well because those are just for people who have to come back and look at your code later and who really cares? Am I right? I mean 1 line instead of 23 means I'm a better programmer, right?

using (SqlConnection conn = new SqlConnection(connString)) using (SqlCommand comm = new SqlCommand(selectStatement, conn)) { try { conn.Open(); using (SqlDataReader dr = comm.ExecuteReader()) if (dr.HasRows) while (dr.Read()) Console.WriteLine(dr["Person"].ToString()); else Console.WriteLine("No C-Level with Head Up Ass Found!? (Very Odd)"); } catch (Exception e) { Console.WriteLine("Error: " + e.Message); } if (conn.State == System.Data.ConnectionState.Open) conn.Close(); }

Phew... OK. I got that out of my system and am done amusing myself for a while. Carry on.

Dispose simply gets called when you leave the scope of using. The intention of "using" is to give developers a guaranteed way to make sure that resources get disposed.

From MSDN:

A using statement can be exited either when the end of the using statement is reached or if an exception is thrown and control leaves the statement block before the end of the statement.

Using generates a try / finally around the object being allocated and calls Dispose() for you.

It saves you the hassle of manually creating the try / finally block and calling Dispose()

In your first example, the C# compiler will actually translate the using statement to the following:

SqlConnection connection = new SqlConnection(connectionString));

try
{
    connection.Open();

    string storedProc = "GetData";
    SqlCommand command = new SqlCommand(storedProc, connection);
    command.CommandType = CommandType.StoredProcedure;
    command.Parameters.Add(new SqlParameter("@EmployeeID", employeeID));

    return (byte[])command.ExecuteScalar();
}
finally
{
    connection.Dispose();
}

Finally statements will always get called before a function returns and so the connection will be always closed/disposed.

So, in your second example the code will be compiled to the following:

try
{
    try
    {
        connection.Open();

        string storedProc = "GetData";
        SqlCommand command = new SqlCommand(storedProc, connection);
        command.CommandType = CommandType.StoredProcedure;
        command.Parameters.Add(new SqlParameter("@EmployeeID", employeeID));

        return (byte[])command.ExecuteScalar();
    }
    finally
    {
        connection.Dispose();
    }
}
catch (Exception)
{
}

The exception will be caught in the finally statement and the connection closed. The exception will not be seen by the outer catch clause.