There are a few issues here. Firstly, the async load method you specified:
<script type="text/javascript" src="https://www.google.com/jsapi"></script>
<script type="text/javascript">
google.load('jquery', '1.3.1');
google.setOnLoadCallback(function() {
// do stuff
});
</script>
has a couple of issues. Script tags pause the page load while they are retrieved (if necessary). Now if they're slow to load this is bad but jQuery is small. The real problem with the above method is that because the jquery.js load happens independently for many pages, they will finish loading and render before jquery has loaded so any jquery styling you do will be a visible change for the user.
The other way is:
<script src="http://ajax.googleapis.com/ajax/libs/jquery/1.3.1/jquery.min.js"></script>
Try some simple examples like, have a simple table and change the background of the cells to yellow with the setOnLoadCallback() method vs $(document).ready() with a static jquery.min.js load. The second method will have no noticeable flicker. The first will. Personally I think that's not a good user experience.
As an example run this:
<html>
<head>
<title>Layout</title>
<style type="text/css">
.odd { background-color: yellow; }
</style>
</head>
<body>
<table>
<tr><th>One</th><th>Two</th></tr>
<tr><td>Three</td><td>Four</td></tr>
<tr><td>Five</td><td>Six</td></tr>
<tr><td>Seven</td><td>Nine</td></tr>
<tr><td>Nine</td><td>Ten</td></tr>
</table>
<script src="http://www.google.com/jsapi"></script>
<script>
google.load("jquery", "1.3.1");
google.setOnLoadCallback(function() {
$(function() {
$("tr:odd").addClass("odd");
});
});
</script>
</body>
</html>
You (should) see the table appear and then the rows go yellow.
The second problem with the google.load() method is that it only hosts a limited range of files. This is a problem for jquery since it is extremely plug-in dependent. If you try and include a jquery plugin with a <script src="..."> tag and google.load() the plug-in will probably fail with messages of "jQuery is not defined" because it hasn't loaded yet. I don't really see a way around this.
The third problem (with either method) is that they are one external load. Assuming you have some plugins and your own Javascript code you're up to a minimum of two external requests to load your Javascript. You're probably better off getting jquery, all relevant plug-ins and your own code and putting it into one minified file.
From Should You Use Google's Ajax Libraries API for Hosting?:
As to load times, you're actually
loading two scripts - the jsapi script
and the mootools script (the
compressed version from above). So
that is two connections, rather than
one. In my experience, I found that
the load time was actually 2-3 times
slower than loading from my own
personal shared server, even though it
was coming from Google, and my version
of the compressed file was a couple of
K larger than Google's. This, even
after the file had loaded and
(presumably) cached. So for me, since
the bandwidth doesn't matter much,
isn't going to matter.
Lastly you have the potential problem of a paranoid browser flagging the request as some sort of XSS attempt. It's not typically a problem with default settings but on corporate networks where the user may not have control over which browser they use let alone the security settings you may have a problem.
So in the end I can't really see me using the Google AJAX API for jQuery at least (the more "complete" APIs are a different story in some ways) much except to post examples here.