jQuery core 1.8.0 is compatible with the latest versions of jQuery UI (1.8.22), and jQuery Mobile (1.1.1).
Even though it doesn't say its NOT compatible but it is not compatible.
So if we enable jquery core 1.8 through jquery update the ui would be still at 1.8.11. Jquery ui 1.8.11 is not compatible with jquery 1.8 due to deprecated curCss function. So i suggest jqery_update also ship with an option to include jquery ui 1.8.22 atleast.
I would have marked this as feature request. But it creates some issues due to the above mentioned incompatibility ( for example it breaks ctools modal popups). So marking this is a bug.