If by version 5 of Photoshop you mean just plain Photoshop 5.0 from the late 90s or early 2000's, then it is too old to upgrade to the current version of Photoshop which is 11 or CS4 and you cannot buy an earlier version of Photoshop, either, so the answer to your question is that you need to buy Photoshop 11 at the full price if you actually want to use Photoshop directly with your RAW images.
You may be talking about some other product with Photoshop in its name, like Photoshop Elements or Photoshop Premier (video) or Photoshop Lightroom, but the answer to what version to upgrade to is still likely the same, unless, perhaps Photoshop Elements 5 is still a valid candidate for the current version of Photoshop Elements which is 8.
You may also be talking about Adobe Camera RAW version 5 and since the current version of ACR is 5.6 and upgrades from ACR 5.x to 5.6 would be free, there is no upgrade cost. ACR 5.x shipped with Photoshop 11 or CS4 so you'd be set by just performing the latest ACR update.
If you don't want to spend $600-ish on PS-CS4 then you could spend half that and get Lightroom 2, now, or even use the LR3 beta from labs.adobe.com until next April and then buy LR3 for $300-ish.
However, if you don't want to spend even that amount of money, then I'd suggest getting Photoshop Elements 8 for around $99 and update it (manually according to the instructions on the ACR update pages) to ACR 5.6 and you'll be able to work with your images one-by-one, which is not as slick as doing multiple images in ACR as hosted in Photoshop, itself, but you'd be using the current ACR technology.
There may be version differences I am not that up on if you are on a Mac and using Elements, where perhaps PSE5 is not that old compared to the currently available version and possibly upgradable to whatever the current Mac version of Elements is.
If none of this answers your question, then be more specific as to what Photoshop 5 means, exactly, since many products have Photoshop in their name.
You can convert your raw files using the software that was provided with the camera or you can buy PS Elements 8 and use the Adobe Camera Raw plug-in provided.
If later you want more features you can upgrade to the full Photoshop from Elements 8.
You can in the meantime shoot raw+JPG as an option. If you are serious about Photography don't abandon the raw format.
This Adobe TechNote covers all versions of Photoshop/Elements and which versions of ACR work with them and for what camera RAW files:-
Also consider DNG which this TechNote also covers