jQuery and MooTools are awesome JavaScript libraries; I prefer jQuery myself. Either one will assist you in your JS game development if you use the DOM. If you go with Canvas rendering, I still think you should use one of those libraries, but you will need to learn the Canvas functions. Here is a tutorial which introduces you to canvas by creating a Breakout clone, so it might be exactly the kind of thing you're looking for (and it uses jQuery).
Animating sprites is a matter of changing an image src, or preloading several images and swapping them out, or in a canvas just drawing frames of an animation. The above libraries can help with any of these cases. The libraries also help with input (look into events such as onkeypress and onmousemove).
For preloading resources, I've seem some games that use a single "sprite sheet" image (here is the one for Google's Pacman game). I believe they basically create a DIV of one tile size, with the CSS background-image property set to the sprite sheet and the background-position property set to the offset of the tile on the sprite sheet. I haven't seen a library that will do this for you, but jQuery or MooTools can help you as far as dynamically creating the DIV and manipulating its CSS. Otherwise, preloading images is a matter of creating <img> tags of the images you want preloaded, and not adding them to the page (or adding them invisibly). Here's a blog post that has some code for a function using jQuery to preload images for you.
SoundManager 2 seems to be the JS sound library to use; I know Vanthia uses it, and Google's Pacman used something similar (or at least the same technique, of using a hidden Flash file on the page to play sounds).
For networking, jQuery can handle AJAX for you, or if you want much more real-time networking (and have the server to do so), look into JavaScript sockets. I don't know if there's a stable library out there for it, but you might look into this or this. Essentially it uses a hidden Java or Flash file on the page so that you can do true socket communication with JavaScript, which is much quicker than AJAX polling and slightly more efficient than "AJAX Push". However, most likely, AJAX Push will be what you want, and APE (Ajax Push Engine) is probably the library to use.
Also, here is a Google tech talk about "Building a JavaScript-Based Game Engine for the Web". It looks neat.
