There are a number of question that have to be answred first to determin which is the best method - do you have shared storage? Do you have vCenter? Are you licensed for vmotion? - either both will work.
I would also take a look at the upgarde guide - http://pubs.vmware.com/vsphere-51/topic/com.vmware.ICbase/PDF/vsphere-esxi-vcenter-server-51-upgrade-guide.pdf