Hey rb51,
If you are installing on the USB it would be a brand new install and not an upgrade. However if you want to back up the host configuration and then install on USB and restore configuration, there is a problem. You will not be able to restore ESX4.x configuration on ESX 5.x
Best option would be an in-place upgrade - on the hdd
Another option would be to use host profiles or update manager.
http://www.vmware.com/resources/techresources/10137
http://www.vmware.com/products/datacenter-virtualization/vsphere/update-manager.html
From what I understand there are two requirements: easy rollback in case of failures and migration to USB. You can do a fresh install of ESXi 5.1 on USB and boot off it. In case of failure, boot back from HDD 
Should the install go through fine, configure one host - create an image profile - upgrade other hosts - deploy image profile
Regards
a