If, for example, the third tab has a class of "ui-tabs-selected" then tabs 1.8rc1 always selects tab index 0 instead of 2.

This seems to be caused by line 176:
  o.selected = o.selected || this.lis.length ? 0 : -1;

...it accidentally changes o.selected from the desired index to a value of 0.

The problem can be fixed by adding parentheses like this:
  o.selected = o.selected || ( this.lis.length ? 0 : -1 );

Hope this helps.
George