Well, so much for that idea.  CNN reports:

Two Democratic sources close to President-elect Barack Obama tell CNN that top adviser Valerie Jarrett will not be appointed to replace him in the U.S. Senate.

"While he (Obama) thinks she would be a good senator, he wants her in the White House," one top Obama advisor told CNN Monday.

My guess is this has more to do with Gov. Blagojevich signaling Jarrett isn't an option, than Obama deciding he wants her by his side in the White House.  When the governor finally announces his pick, I think it's going to be pretty clear what he got in exchange.  It's hard to see what he would gain by tapping Jarrett -- besides President Obama's good will, of course.  And considering the dire straits Blagojevich finds himself in these days, that's probably not enough.