I've upgraded two vCenter 4.x's to vCenter 5 now and ran into this both times.
While upgrading the Update Manager the error returned is (paraphrasing):
"Can not connect to the database, please verify username and password..."
If your vCenter has been through a series of upgrades (like mine) the installer may be referring to a DSN (32bit vs 64bit DSN) you have not updated with the correct credentials.
To update the DSN the installer is referring to, you need to run the 32-bit ODBC tool which is located at C:\Windows\SysWOW64\odbcad32.exe. Do NOT use the default odbcad32.exe located in the C:\Windows\System32 folder. While it has the same file name, they are two different files!!
Also, if you get an error generating the JRE SSL keys, re-running that step should succeed.
Again, check your DSN with the C:\Windows\SysWOW64\odbcad32.exe, not the default path odbcad32.exe