I am worried that using a 1/2" drill bit to cut a hole for the Kobiconn 2.1 DC jack (Mouser: 163-4302-EX) will not work as the jack needs more to latch onto. What does everyone use to drill holes for this jack?

1/2" is fine.  i've never had a problem.

If you don't have to drill a lot of holes like that, you might want to consider buying yourself a tapered reamer to increase hole diameter in a graded fashion.  Maybe I'm just too haphazard in my methods, but I regularly find that I can't drill holes the exact size I want/need, whether it's a question of not having a bit the right size, or even something dumb like wanting to situate the hole on the side of a chassis that does not permit me to sink a stepped bit far enough to produce the right sized hole.  In those cases, it's tapered reamer to the rescue!

Thank you. The 1/2" worked perfect. There is no sliding through the enclosure. It's the best fit. Using a Cobalt drill bit this last while has been worth the investment of a few more bucks.