A week or so ago, VMware released 5.1 Update 1 (Build Number: 1065491). This post will show you how to quickly and easily upgrade your system. If you read VMware's documentation and are still confused, than this should help you. It is just too bad that VMware has to make everything more complicated than it needs to be.
Step 1: Download zip bundle (update-from-esxi5.1-5.1_update01.zip ) not iso from VMware's download site: http://www.vmware.com/patchmgr/download.portal When you get to the portal, select "ESXi (Embedded and Installable) from the dropdown.
Step 2: Copy (scp) the update zip file to your datastore (/vmfs/volumes/datastore1)
Step 3: Shut down all running VMs on the host you want to upgrade
Step 4: SSH to the ESX host you are going to upgrade and run the upgrade command
esxcli software vib install --depot /vmfs/volumes/datastore1/update-from-esxi5.1-5.1_update01.zip
Step 5: When the upgrade finishes reboot the ESX host
Step 6: Start all of the VMs that you shutdown in Step 3
Step 7: Upgrade the vmware-tools for each VM that had older versions
Step 8: Upgrade your vSphere application