A standard clearance between Jersey and Guernsey is 'not above 1000ft SVFR'. Provided you comply with Rule 5, there is no problem. Passengers generally seem to love it.
Single pilot IFR public transport is normally only allowed with a functioning autopilot. The Trislanders and Islanders operated by Blue Islands and another channel islands operation have an exemption from the CAA to fly without one, but they are not allowed into the major TMA airfields of the UK unless a second pilot is carried.
Just to clarify Dunc's post: TheJetstreams of BI have no autopilot, but they are twin-crew. It is the Trislanders which occasionally have pax sitting next to the pilot, but only under certain conditions. The Trislanders do all have HSI and GPS (VFR standard only). They are fully IFR equipped to CAA standards.