I have not had any issues with jQuery and ASP.NET together. Here is an example site I put together recently which makes use of ASP.NET AJAX and Thickbox which is built on jQuery.
http://homes.offwhite.net/UnionPointLofts.aspx
The collapsible panels are near the bottom while the Thickbox feature manages the images. You can see there are no conflicts.
I use jQuery much more extensively on this site...
http://www.linkmindr.com/
It also uses the collapsible panels while I use jQuery to do my lightweight callbacks. Since the ASP.NET AJAX objects are generally all under the Sys name they will not conflict with other libraries which maintain a similar namespace concept. And jQuery is respectful of this construct. The following blog entry was written by the author of the jQuery library and the topic should reassure you about using jQuery.
http://ejohn.org/blog/thoughts-on-openajax/