When you go to download JQuery files from the site, you are presented with 3 files that you can download.
Then you start thinking which one to download use. As far the features or functionality goes, all three files do the same job. The difference is what extra help these 3 files provide.
Lets look at jquery-1.3.2.min.js. If you open this file in editor, you will find that the whole implementation is very cryptic and is presented 2 lines. Well as name suggests, this file has been minified. What this means is that all indentation, line breaks, indentations have been removed. And all function parameter names have also been turned into very short names. This helps in keeping the file size small. You shall be using this file when you deploy your application in production environment.
Next is JQuery-1.3.2.js. If you will open this file, you will notice that all functions and implementation is nicely formatted. And all function and parameter names are very self explanatory and may be long at times. This definitely bloats the size of the file. But this file is very helpful during development stage or for debugging purposes because you can clearly see where the error is what could be cause of the error.
Last one is JQuery-1.3.2-vsdoc.js. Open this file and you will find that each function and parameter has been nicely documented using Visual Studion XML Doc conventions. What this means is that Visual STudio provides nice intellisense support for JQuery implementation. You can see from following screen shot how help documentation pops up when you start writing JQuery code in your page's editor.
When you are developing your web application, you should always use this file in development stage and take advantage of Visual Studio's intellisense. Since Microsoft has adopted JQuery in its MVC framework, I am expecting that Microsoft will contribute to JQuery to add more features and build some tools around to it to help development of ASP.Net application easy using JQuery.