I wrote some steps on this in a previous post.  I am back again to take you for my ride in upgrading to update 1 for ESXi 5.

Direct download update link: https://hostupdate.vmware.com/software/VUM/OFFLINE/release-328-20120312-212851/update-from-esxi5.0-5.0_update01.zip

Once you have the upgrade zip, you will wan to SCP this over to the ESXi 5 server.
I use my datastore as it has the most space aviable.
Issue the following command:
esxcli software vib update –depot=/vmfs/volumes/datastore1/…  *path to zip file*
This may take a few minues to return some results.
When it does you will know and it may look something like this:
Reboot you server (just type reboot)
That’s it, you are done.