This command restarts the hostd process. It should have no impact on your running vm's provided you have the ESX host patched properly, or if your esx host settings to automatically start on stop the running vm's are disabled when the ESX host starts. You can check your host by looking at the configuration tab - then under the Software section there is the Virtual Machine Startup/Shutdown link.
If it is disabled then no worries on your patch level. If it is enabled check to make sure you have the appropriate patch.
There are different patches to apply to prevent any restart of the vm's when running this command if your settings on the host enable the autostart of vm's when the ESX server boots.
Here is a link to the KB for ESX 3.5 you can check the downloads area for the
appropriate patch for your build here >
In the service console you can run esxupdate query -l to verify what patches are installed on your host.
