dynatree
This module implements http://code.google.com/p/dynatree/ to create treemenus.
See a demo here: Tree menu DEMO
Dependencies
Install
Download the libraray into sites/all/libraries/dynatree. So the jquery.dynatree is reachable by sites/all/libraries/dynatree/src/jquery.dynatree.js
DOWNLOAD: http://code.google.com/p/dynatree/downloads/list
You need to set the menus to expanded! Otherwise there is not html code that could be converted to a tree.
Misc
jstree has problems with using jquerys height(); function on a container that jstree is inside (because of its implementation with css it will always get the full height as if all menu items would be expanded). I couldn't find a fix. That is another reason i use dynatree.
Taxonomy Menu
The latest dev version of taxonomy_menu has also en option to create the taxonomy menus expanded. You can use that to create the menus expanded. Menus must be expanded to create a tree.
Alternatives
http://drupal.org/project/jstree | abandoned
http://drupal.org/project/dhtml_menu | much issues, bugs