Would it be possible to upgrade from esx3.5 Update2 to the new vSphere4? I know that you will be can get free upgrade as long as you have full support for esx3.5 servers with VMware. I was just think about the Dell Quad/Dual Core Xeon processors will be good enough for the vSpere upgrade or we have to upgrade the esx server hardware first to Intel Xeon 5500 CPUs they are taking about in all vSphere presentations?
We are running esx3.5 U2 on Intel Xeon 5335 2.0GHz processors, Some of them are quad cores and some are dual core.
Will it be the one step upgrade process from esx3.5U2?
The HCL and release notes including upgrades/installation has not been released for vSphere 4.0, they'll be available upon product GA. I would assume there will be an upgrade path hopefully all the way from ESX 3.5.x but only time will tell, the only known fact is that you need to make sure your hardware is 64bit, that is a new requirement. From the BETA, the HCL closely followed the HCL for ESX(i) 3.5 so hopefully that'll give you an idea, but all this is an assumption until the official docs are out.
VMware vExpert 2009
If you find this information useful, please award points for "correct" or "helpful".
See the comment by Lee on this thread regarding the HCL - http://communities.vmware.com/click.jspa?searchID=5692772&objectType=2&objectID=1233364. The upgrade scenarios from 3.5 to 4 will be similar to what you had for 3.0 to 3.5.
With regards to the HCL, as long as your CPUs are 64bit, ESX 4 requirement, and your hardware is recent enough, ie not several generations old, then I would expect to see it on the HCL.
If when the HCL is published you don't see your hardware it may be for a few reasons, your hardware vendor may not have gotten to it yet. They are obviously going to start with the currently shipping product first and work backwards to a reasonable degree.
euphony if you mention the server model some one may be able to provide an educated guess.
There are a few upgrade guides and videos around, all in all it is relatively painless.
as others have said. vSphere requires 64-bit sockets which is the first check and your intel e5335's are 64-bit if memory serves me correctly. you can download tools from intel to show all features of your CPU's
the upgrade process is very similar to the one you are familiar with. we have published a series of short videos online which you might want to review. The series breaks the upgrade process up into 4 sections. see here