As you know, CentOS released version 5.5 and if you are using Centos Linux 5.4, you may actually upgrade it directly through your machine through the Internet with yum command.
To upgrade Centos version, you should take this 2 major steps.
1. Make a Backup.
2. Update package.
1. Make a backup
It is important to make a backup before you do any upgrade or installation. I will suggest you to have a full backup of your machine before doing the upgrade in case anything happen.
Make sure you have all of the data and database backup!
2. Update package
i) To upgrade your Centos, you may use yum command to upgrade it directly. However, you may try to check any update list available.
yum list updates
ii) You may update Centos as command below.
iii) Reboot your machine
iv) verify if everything working
tail -f /var/log/messages