Drupal and jQuery are two of my favorite things. They play nicely with each other and make development a cinch. Unfortunately the version Drupal ships with can be limiting. This is because Drupal 6 was released in February of 2008 and ships with jQuery 1.2.6. As of July 2011, jQuery is at version 1.6.2.
There is a popular module for Drupal called jquery_update which brings the version up to 1.3.2. The module won't update to a newer version because any newer version of jQuery breaks some core Drupal functionality. Until recently, this wasn't a problem for me as jQuery 1.3.2 has worked fine.