Having error when using jquery.corner.js with jquery-1.6.2.min.js

I recognize that this might not exactly be the answer you are looking for, but for such a simple task I'd try to avoid complex and error prone scripting solutions.

Update: Corrected the code due to a bug in the previous version and added a red border for better readability.

Instead I'd go with a simple CSS 3 solution which is supported by all modern Web browser like Mozilla Firefox, Google Chrome/Chromium, Apple Safari and Opera. As for Internet Explorer it is supported with IE 9+ (with a change in your masterpage of "X-UA-Compatible" to "IE=8;IE=EmulateIE9").

In this scenario the CSS would look like:

#s4-leftpanel-content
{
    border: none !important;
    position: relative;
}
#s4-leftpanel-content .ms-quicklaunchouter .ms-quickLaunch
{
    border: 5px solid red; // this is just for better readability
    position: relative;
    -webkit-border-radius: 20px;
    -moz-border-radius: 20px;
    border-radius: 20px;
}

However, if you need to support legacy Web browsers like IE 8 and below I'd rather use CSS3 Pie http://css3pie.com/ instead of jQuery, like this:

#s4-leftpanel-content
{
    border: none !important;
    position: relative;
}
#s4-leftpanel-content .ms-quicklaunchouter .ms-quickLaunch
{
    border: 5px solid red; // this is just for better readability
    position: relative;
    -webkit-border-radius: 20px;
    -moz-border-radius: 20px;
    border-radius: 20px;
    behavior: url("/_layouts/styles/pie.htc");
}

CSS3 Pie is an awesome library to bring several missing CSS 3 features to IE and I'm using it frequently to overcome several IE limitations without requiring scripting hacks.

Hope that helps!