That's the only way I perform upgrades. All of my hosts are in a DRS cluster so I simply put one host at a time in MM, wait until all the VM's are migrated and then proceed with the upgrade. Rinse, repeat with the next host. Upgrading VMware Tools immediately is not necessary and you can do that rather quickly after hours. As long as you have enough running hosts to meet demands while you take one down it shouldn't be a problem. Like someone already said, upgrading vCenter does not have a negative effect on the hosts as long as it doesn't go belly up or you need to make config changes during the install process. Just make sure you do it all in the correct update sequence.
VMware KB: Update sequence for vSphere 5.5 and its compatible VMware products