How to: Upgrade to vSphere 5
Virtual Machine upgrade
Step 5: The final step in the upgrade process is the upgrade of all virtual machines in the environment.
Start the virtual machine upgrade by first upgrading VMware Tools, followed by the upgrade of the Virtual Hardware to version 8. Virtual Machines need to be powered off in order to be upgraded, so you should plan appropriate outage windows for this step. You can perform an orchestrated upgrade of Virtual Machines with vSphere Update Manager, which allows you to upgrade VMware Tools and virtual hardware at the same time.
Note: vSphere 5.0 fully supports running virtual machines with VMware Tools version 4.x as well as Virtual Hardware versions 4 and 7, so you comfortably run existing virtual machines until a suitable outage window is available.
The complete upgrade process is now complete. When you go through all these pages and setting it may look like a lengthy process but it’s actually not. The complete upgrade took me no more than one hour!
Now you can enjoy all new vSphere 5 features VMware has given us/you. Enjoy!