You don't really need to update jQuery unless there is a major security issue with an older version.
However, to change it, you need to create an advanced theme to override the head_script function. I do something similar to call the same jQuery file I use on the main site:
if (isset($this->content['script']))
{
foreach ($this->content['script'] as $scriptline)
{
if ( strpos($scriptline, 'jquery') === false )
$this->output_raw($scriptline);
else
$this->output_raw('<script src="your_jquery.js"></script>');
}
}