jackjack2, did you figure this out? I went ahead and migrated to esxi 5.0 U2 from ESX 3.5 u5. Had to perform clean install and I have a iSCSI SAN. Here was what I did:
1. Took a screen shot of every configuration of my ESX host. Went to configuration->software adapter->click the iSCSI adapter->properties->copy iqn and alias->click dynamic discovery tab and note any IPs. You may need these IPs when discovering datastores later on.
2. After documenting the configs, put the host in maintenance mode.
3. Once in maintenance, remove the host from the vcenter server. Log in to the host directly and shut it down.
4. Remove all network cables. Labeling cable helps before you detach the cables.
5. Clean install esxi 5.0.
6. After install, before rebooting, attach the network cables.
7. Configure and test management network. If your management network test fails see if you entered anything in vlan id. Chances are your port isn't trunked in the physical switch. In such case, removing the vlan id (when configuring management network) works.
8. Bring the host to vcenter server.
9. configure network, time, dns, etc.
10. Add a software iSCSI adapter. This adapter will have a new iqn. Either you need to provide this iqn to your SAN administrator so that he can update it on SAN side, or you can use the old iqn.
11. In my case, I made a copy of the new iqn and then deleted it. Then entered the old iqn gotten from step 1. Also, entered the alias (since one was present before). After this, rescanning and refresh still didn't populate the datastores. So, I went to the iSCSI adapter's properties and then dynamic discovery tab. Added the IPs that were present before (otherwise, you will need to enter the virtual IP of the cluster(s) that you datastore(s) belong to). Once IPs were added to dynamic discovery tab, it asked if I wanted to rescan HBAs. I said yes and viola! my datastores were populated.
12. Add the host to the cluster.
Note that, you can add iSCSI adapter after you join the host to the cluster. However, in that case HA will not be happy since no datastores heartbeats will be detected. Also, when datastores are discovered it may initially show up as unmounted. Don't panic. After a minute or so it will be mounted.
Hope this helps!