Jquery fadein/fadeout problem in Chrome

Problem with fadein/fadeout in chrome using 1.6 and 1.6.1.

HTML

<div id="fun">
    <a href="link1"><img src="http://www.atex.com/polopoly_fs/1.505.1294172851!/image/image.jpg_gen/derivatives/landscape_980/image.jpg" alt="" /></a>
    <a href="link2"><img src="http://hydhopetravels.com/media/product_image.gif" alt="" /></a>                        
    <a href="link3"><img src="http://www.dubaiic.com/images/980~220~2~ffffff~82~0~dic-v1-en~0/20071101_20071009-news-1.jpg" alt="" /></a>                        
</div>

JavaScript

(function ($)
{
    // DOM READY EVENT
    $(function ()
    {
        $("#fun").cycle();
    });

    $.fn.cycle = function (options)
    {
        return this.each(function ()
        {
            $.cycle(this);
        });
    };

    $.cycle = function (container)
    {
        var elements = $(container).children();

        if (elements.length > 1)
        {
            $(container).css('position', 'relative').css('height', 'auto');
            for (var i = 0; i < elements.length; i++)
            {
                $(elements[i]).css('z-index', String(elements.length - i)).css('position', 'absolute').hide();
            };

            setTimeout(function ()
            {
                $.cycle.next(elements, 0);
            }, 3000);

            $(elements[0]).show();
        }
    };

    $.cycle.next = function (elements, current)
    {
        var next = (current + 1) < elements.length ? current + 1 : 0;
        
        // Animate transition
        $(elements[next]).fadeIn(1000);
        $(elements[current]).fadeOut(1000);

        // Not a problem to use show and hide
        // $(elements[next]).show();
        // $(elements[current]).hide();

        setTimeout(function ()
        {
            $.cycle.next(elements, next);
        }, 3000);
    };

})(jQuery);