Every jQuery version has some bugs.
E.g. See:
bugs.jquery.com/query?status=%21closed&group=milestone&report=3&order=priority
for currently open ones (affecting 1.6.1 too).
Even jQuery 1.6.0 had backwards-incompatibilities that got fixed in 1.6.1.
I'm not aware of any jQuery 1.5.0 bug affecting CB itself or any of the 50+
CB Team plugins.
Can you please be more specific ?
To upgrade, you need to overwrite the files in the js/jquery folder of CB, at your own risk. so backup first.
Each CB version comes with latest jQuery plugin at release time that is stable and backwards compatible and tested.