jQuery dialog with dynamic content

I want to create a jQuery dialog on-the-fly. I'm using this:

var newDiv = $(document.createElement('div')); 
$(newDiv).html('hello there');
$(newDiv).dialog();

I then have this in the html header:

<script type="text/javascript" src="js/jquery-1.4.2.min.js"></script>
<script type="text/javascript" src="js/jquery-ui-1.8.1.custom.min.js"></script>

When I try running the JS in IE7 I get the following error on the $(newDiv).dialog(); line : Object doesn't support this property or method.

Anyone know what's going on?