Adding ESX 3.5 host to your vCenter 4.0 server
If you plan on upgrading your existing Virtual Center server to 4.0 or standing up a new one. You have to remember about the differences in the licensing methods. The vSphere hosts now use license keys and the ESX 3.x hosts will require a license server to remain active while they are still in your environment.
You can download the VMware license server for no charge and install on a server. Point it to your license file and then all you have to do is point vCenter server to it. In vCenter server under Administration and vCenter server settings there is a Licensing section that you need to complete. Point it to the IP or name of your license server and you will now be able to add in those older hosts.
If you do not setup a license server you will get an error when trying to add the host in explaining that it could not find a license server. You can download the license from here.