@questioner: Good question. I consider jQuery Update foundational because we use jQuery for some of our UI design magic and some jQuery UI plugins are not compatible with older versions of jQuery and jQuery UI. While a case could be made that this module isn't necessary at this time, I believe it will eventually become necessary as jQuery continues to progress and Drupal 7 is stuck with an old version in core. So for updatability we prefer to get on this path now. Also, I've personally never found it troublesome on any of our sites, at least not in D7 (D6 was a different story).