UPDATE I have reverted back to Jquery 1.3.2 and everything is working, not sure what the problem is/was as I have not changed anything else apart of t
Had the same problem while working with bootstrap modal. I had accidentally set the z-index for .ui-datepicker using !important which overrides the date picker z-index css attribute on the element. Removing !important worked.
.ui-datepicker
!important