I was using jQuery 1.9.2 and had placed an input field with autocomplete on a Modal Dialog, and was populating it using Ajax and Json. It displayed the .ui-menu correctly.
In changelog 1.10.1, for Autocomplete you write:
Added: Use .ui-front instead of .zIndex() for the suggestions menu. (7d5fe02)
Following your link and looking through your code gave me an idea: I performed my Autocomplete search, and then I moved the dialog to the side! That's when I noticed the .ui-menu was ''behind'' the Modal Dialog.
I fixed this by adding the following CSS rule:
Although I have a workaround, I'm posting this so that you can fix it in your next release.