vCenter Server 5.0 requires a license server to manage ESX/ESXi version 3.5 hosts.

vCenter Server 5.0 does not require a license server to manage ESX or ESXi version 4.x hosts.

If you have a license server installed, you can configure your newly installed or upgraded vCenter Server to use the license server. If you do not have a license server installed, you can download the VMware License Server from the VMware Web site at http://downloads.vmware.com/d/details/esx_35_licenseserver_dt/dGViZGVoKmJkZXBo. After you have installed the license server, configure vCenter Server to use it.

See the information about configuring vCenter Server to use a license server in the vCenter Server and Host Management documentation.

You can also upgrade legacy hosts to manage them through vCenter Server without a license server.