The biggest issue in going from older version to 4.1 is that you can not do it with vihostupdate utility. You need to use the vsphere cli instead. A nice article explaining how to do that is here. You will also need to read the upgrade guide provided by vmware as well, but be carefull as it contains an error in the example. The link above corrects the problem by providing a correct cli line for the update. Take a look for yourself.
I am providing the text below in case the post disappears:
This guide is written with ESXi 4.1 update 1 in mind, however it will work with any update version from 3.5 onwards.
First off you will require vSphere CLI, this is a free download available to everyone with a valid VMware login. If you don’t have one you can easily register for a new one. Download from the VMware website
Download the update package from the VMware website
Power off all VM’s or vMotion them to another host and place the host in maintenance mode. (Right click on the host and select Enter Maintenance Mode)
The upgrade package contains two update bulletin parts. The esxupdate bulletin and the upgrade bulletin. These both need to be installed by running these commands on the computer with the vSphere CLI installed on it.
Ensure these commands are run from this directory C:\Program Files\VMware\VMware vSphere CLI\bin>
vihostupdate.pl –server Hostname or IP address -i -b patch location and zip file name -B ESXi410-GA-esxupdate
when prompted enter the root username and password
vihostupdate.pl –server Hostname or IP address -i -b patch location and zip file name ESXi410-GA
If following the vSphere upgrade guide you may notice that this last command fails with this error message
No matching bulletin or VIB was found in the metadata.No Bulletin or VIB found with ID ‘ESXi410-GA’.
This is because it has an extra -B in it. If you run the command listed above it will work.
Finally type the following to confirm successful installation.
vihostupdate.pl –server hostname or IP address –query
Reboot the host to complete the installation. Don’t forget to take it out of maintenance mode!!