I've recently finished working on a project where we converted a lot of legacy VB6 applications to C# using Artinsoft's VB Upgrade Companion.
It's a tough call to decide which approach is the best. In a lot of cases, converting the code can end up being very painful, especially if there is a lot of logic based around features which are significantly different between the two platforms (e.g. one-indexed arrays, or handling errors via the Information.Err object instead of through exceptions).
On the other hand, if you try to write it from scratch, there is a good chance that you'll accidentally change some subtle behaviour that isn't immediately obvious when reviewing the original VB5 code. Things like this can be difficult to track down.
A good compromise is to use a converter to port the code over, then use this as a guide for writing things from scratch, as there will hopefully be places where you can just lift converted code across straight into the new code base. At the same time though, you get the benefit of writing more maintainable code everywhere else.
With all that said, if the original VB5 is well written and (relatively) well architected, then I would recommend against any sort of upgrade. You will spend far more time trying to match the existing behaviour of the old application than you would just working on the old code.
Good luck with whatever you decide to do - you'll need it :)