Did you know my Anego CMS implements it's own, modular jQuery Drag&Drop Tree for the menu management?
Here's a demo of it
Why you ask?
Because ~10 hours of searching for a user friendly, compact, styleable, clean jQuery Drag&Drop Tree Plugin yielded in nothing :D
Feel free to get above demo at http://tyron.at/files/sortabletree/ and use it for your own projects. The plugin is licensed under the GPL v2.0. It has a few graphical glitches, but apart from that it works flawlessly, from what I experienced. If you want to know how to handle the callbacks on the server side, check out the code of Anego. The icons are taken from ExtJS and FamFamFam.