Sounds like the right plan. Some might suggest doing a complete reinstall at step 3. instead of an upgrade. I did an upgrade and haven't had any issues.
Either way just make sure you patch with all the released 3.5 patches at the end.
I've had problems migrating VMs from a 3.5 host to a 3.0.2 host using vmotion so you might want to consider creating separate clusters until all the hosts are upgraded (suggest complete rebuild rather than upgrade - but other people (as above) have had no problems with an upgrade).
I agree with Jayolsen, however make sure you backup your VC database first. Also if you are using SQL 2005 to host your VC database, you will need to use the SQL native client driver for your ODBC connection. Another thing to note is the sql account you use to connect to the VC database must be db_owner of the VC db and also the system database msdb.
I also advise upgrading your license server.
Just a suggestion, you may want to disable HA before upgrading Virtual Center. Just upgrading from version 2.5 to version 2.5 Update 1, I saw a lot of HA errors in my clusters. Might want to disable it, then renable it after upgrading all the hosts to 3.5.