yes, if you want non-stop running, you end up w/ a UPS and a generator but the UPS can be much smaller since all it has to do is carry the load for a few seconds until the generator comes online and is stable.
Basically, once the utility power drops out, the ATS sees that and commands an auto-start of the generator, once that is stable, it switches over to gen. supplied power and the house/circuits is fed from that. Getting a gen setup for just a few circuits isn't that much less $$ than just doing the whole house.
We installed a 400KVA unit for the office and of the $700K we spent on the project, only $130K was the generator unit itself. Of course,
since the office park was built on landfill, they needed to go down 7' to make the pad to support the 40000 lb unit.
Just for laughs ---->>> http://1drv.ms/1OusSIp
edit: our generator was diesel powered (1700gl). turns out that a natural gas or propane generally requires a motor 50% larger due to BTU efficiency (or lack thereof) which would have been cost/size prohibitive.