I would recommend vConverter for this. Migrate ALL the VM's someplace, install ESX, do the patches on that server, then convert them back.
You can probably upgrade the server just fine, but the VMFS (EXT2 vs EXT3) cannot be upgraded, and it will be read only, and it will be a mess trying to do this, so vConverter is the best idea.
Ok, but by saying that the VMFS will be read only you mean that after the upgrade i will not be able to create new VM's? If so, i would not be able to convert them using Converter too.
Or I would have to create new VMFS volumes and give the server access to them when upgrading the server so they can read from the old volumes and write to the new ones?