You can also use advanced mode if you specify that your js file is using jQuery by specifying an 'extern' file for jQuery. This way the closure compiler won't change your jQuery function calls inside your javascript.
java -jar compiler.jar --compilation_level ADVANCED_OPTIMIZATIONS --js_output_file application.js --externs jquery-1.4.4.externs.js
You can find some of the jQuery extern files here:
http://code.google.com/p/closure-compiler/source/browse/trunk/contrib/externs/