menu_items_controller.rb

  def reorder
    @menu_items = current_site.menu_items.by_position.all

    respond_to do |format|
      format.html # index.html.erb
      format.xml  { render :xml => @menu_items }
    end

  end
  
  def sort
    @menu_items = current_site.menu_items.by_position.all
    @menu_items.each do |mi|
      mi.position = params['menu_item'].index(mi.id.to_s) + 1
      mi.save
    end

    render :nothing => true
  end

reorder.html.erb

<% content_for :head do %>
    <script type="text/javascript">
        $(document).ready(function(){
          $('#menu_items').sortable({
            axis: 'y',
            dropOnEmpty: false,
            handle: '.handle',
            cursor: 'crosshair',
            items: 'li',
            opacity: 0.4,
            scroll: true,
            update: function(){
              $.ajax({
                type: 'post',
                data: $('#menu_items').sortable('serialize'),
                dataType: 'script',
                complete: function(request){
                  $('#menu_items li').effect('highlight');
                  },
                url: '<%= sort_admin_menu_items_path %>'
              });
            }
          });
        });
    </script>
<% end %>


      <ul class="list" id="menu_items">
        <% @menu_items.each do |menu_item| %>
        <li id="menu_item_<%= menu_item.id %>">
          <div class="left">
            <%= image_tag "icons/handle.png", :class=>"handle" %>
          </div>
          <div class="item">
            <p><%= menu_item.name %></p>
          </div>
        </li>
        <% end %>
      </ul>