Hennish,
Realize this is a bit of an older post, but I am facing a similar situation. I have a old 5.0 vCenter server that I want to move to a new VM running 5.5 U1, new OS (currently 2008 SP2 want to go to 2012 R2) and new DB version (currently SQL 2008, want to go to SQL 2012). I have done the VDS->VSS->VDS before and it works, but was also wondering if moving the DB would be a better approach. Want to make sure it is fully supported as well. I have seen the VMware KB that suggests moving to the new server on the same version, in other words, move to the new VM on 5.0 with a backup/restore of the SQL DB and then upgrade to 5.5 in place once you are on the new VM. That seems cumbersome as well. I am generally of the old school of thought that starting fresh is a good thing to do at some point, but interested in what you ended up doing.
Thanks,
Bob