Always go to manufacturers site for the literature on chips, first.
http://www.semiconductors.philips.com/pip/P89C5...51RD2.html is the page where you obtain all the information you need, including the link to current datasheet, and appnote 461, where the IAP is dealt with with more detail.

But to answer your question straight, yes, the FLASH in P89C51RD2 is to be erased in whole sector, block or whatever you/they call it, several kB of size, at once. For smaller FLASH block almost-perfect-replacement you can consider the P89V51RD2 with 128 bytes to be erased at once; or AT89C51RD2 (or better, AT89C51ED2, available in DIP40 and having extra internal EEPROM), which has 128-byte block but it's erasure happens transparently to the user, behaving as if it would be a completely bytewise-reprogrammable device (only with impact on "wearout" of the block, if bytes within it are "reprogrammed" often, one "full cycle" spent on "reprogramming" a single byte, requiring "smart" approach (write as many bytes at once as possible/needed) to reduce wear).

Observe also the endurance parameter and perhaps consider using EEPROM/FRAM etc. as Erik suggested.

Jan Waclawek