Hi,
definitely go for the latest release (5.5 U2) [only HW or SW limitations of your current environment can push you to 5.1]
before you start with upgrade check that your actual environment meet all the requirements (including VMware HCL) for vSphere 5.5 use these links:
VMware KB: Upgrading to vCenter Server 5.5 best practices
VMware Compatibility Guide: System Search
Upgrade steps with correct order:
Upgrading Environments with Host Clusters
VMFS3 datastores can be upgraded to VMFS5 once all of your hosts will be on 5.x release or non of the legacy (4.1) hosts are accessing the datastore...
For more info about VMFS5 upgrade see:
VMware KB: Frequently Asked Questions on VMware vSphere 5.x for VMFS-5
In addition have a look at these sources:
VMware KB: Block size limitations of a VMFS datastore