I am seeing some strange behavior with Jquery 1.8 where scrolling is not working on a sortable list. Here is a fiddle example:

http://jsfiddle.net/m765z/3/

As you can see, the list is not scrolling on the drag. If you downgrade to 1.7.2, everything works as desired.

Here is a StackOverflow question that another user opened about this very issue:

http://stackoverflow.com/questions/12361986/jquery-1-8-breaks-sortable-list-scrolling-inside-absolute-positioned-element-wi