I also used WPAU to upgrade. I had issues with the visual editor, though for me, it seems that WPAU did not cause the issues, but rather the ‘Use Google Libraries’ script. It reports the actual version of WP, which is most likely the cause of the problems. They probably weren’t ready for 2.8 and didn’t have the libraries out or something.
I don’t know if that will fix it for everyone, but I recommend you try to disable that if you have it installed.