JQuery 2.0 has been released. It is smaller and faster due to not supporting Internet Explorer prior to IE9, a move that pleases most developers.
Having to supporting all the existing browsers is a headache for developers. Internet Explorer 6 is such a headache that Microsoft itself has been campaigning to eradicate it.
The jQuery team has taken the decision not to let old versions of IE interfere with the performance of "the modern web" any longer and jQuery 2.0 drops compatibility with IE 6, 7, and 8. The next browsers to go will be Android/WebKit 2.x, but currently Android 2.x market share precludes this.
The benefit of reducing support for old browsers is that the final 2.0.0 file is 12% percent smaller than the 1.9.1 file and developers can exclude combinations of 12 different modules to create a custom version that is even smaller.
In terms of functionality, jQuery 2.0 is API-compatible with 1.9, which when it was released in January 2013 had already removed a lot of old code to produce a streamlined API. The jQuery team aims to minimize divergence between the 1.x and 2.x branches and the main changes in 1.9 are all included in 2.0 and a jQuery 1.10 is expected to be released within a couple of months to incorporate the bug fixes and differences reported from both the 1.9 and 2.0 beta cycles.
The plan going forward is that the jQuery 1.x.x branch will continue to accommodate older browsers and to maintain feature parity between 1.10 and 2.0, 1.11 and 2.1, etc.