vSphere products distinguish between upgrades, which make major changes to the software, and updates, which make smaller changes to the software.
VMware product versions are numbered with two digits, for example, vSphere 5.1. A release that changes either digit, for example, from 4.1 to 5.0, or from 5.0 to 5.1, involves major changes in the software, and requires an upgrade from the previous version. A release that makes a smaller change, requiring only an update, is indicated by an update number, for example, vSphere 5.1 Update 1.
When you upgrade an ESXi host, some host configuration information is preserved in the upgraded version, and the upgraded host, after rebooting, can join a vCenter Server instance that has been upgraded to the same level. Because updates and patches do not involve major changes to the software, host configuration is not affected.
For information on updating vCenter Server, see Updating vCenter Server with Service Packs and Upgrading and Updating the vCenter Server Appliance.