After I upgraded to 3.3 I noticed an issue when I would try and edit a post or page. Additionally, I noticed that my WordPress Admin navigation fly-outs weren't working. I searched through these forums and found that others were having this problem too, and for some it seemed that using the "Use Google Libraries" plugin worked, but there was no real answer as to what was causing this. I think I found the problem.
For me, I was using a home-built theme and had my jQuery script hard coded in my theme's head element, and I was filtering out the jQuery call from the wp_head() function via my functions.php file. I modified my code to allow the wp_head() function to set the jQuery call, and removed my hard-coded call.
This fixed everything, so I'm not sure if the issue was with jQuery version 1.6 vs. 1.7, or if there was something wrong with the way I was filtering it out.
Anyway, allowing wp_head() to set the jQuery version worked.
Hopefully this helps,