Installing ESXi and update via USB stick

If you have a standalone esxi 5 server and you want to upgrade it, you can use an usb stick to update the server. Notice that the USB key or disk device media is formatted with a FAT16 partition and has a maximum size of 2GB.

First of all you need the following article

Basically because you can now assign usb devices to VMs, you need to stop the service that does so
/etc/init.d/usbarbitrator stop

You will then be able to find the usb under /vmfs/volumes after you reconnect it. You don't need to restart the service as you will reboot after the updates

Now put your ESXi in maintenance mode 
vim-cmd hostsvc/maintenance_mode_enter

Then to apply patches, use the following command
esxcli software vib install -d /vmfs/volumes/[USB]/[PATCH_FILE].zip

Reboot when done and you should be setup!