Migration - Is where you are migrating from ESXi 4.x to a brand new install of ESXi 5x
Upgrade - is where you upgrade the existing ESXi 4.x host this will allow you to keep the host configuration - things to keep in mind before starting is make sure the existing hardware is supported by ESXi5 - you will want to place the host to be upgraded in Maintenance mode - vCenter will have to be upgraded first
As long as vCenter is upgraded to version 5.x different versions of ESXi can coexist in a cluster