upgrade VMware tools: I guess yes, but reboot is not (always required)
Yes thats right rebooted may be required but not always and depends on the components which gets updated
Also check Clarification on (Zero-Down Time) VMware Tools Upgrade in vSphere 5.1 | VMware vSphere Blog - VMware...
upgrade VMware hardware version: I guess not.
Virtual hardware need to be upgraded only there is version U1 is just like a patch. When you are updating from vSphere 5.0 to 5.1 then Virtual hardware upgrade is required
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