I would honestly recommend you just update to 5.00M33-4 or 5.00M33-6 and just stay on one of these. It is the most stable firmware and is compatible with the most things. It also supports the 1.5 kernel for older homebrew.
If for some reason you do feel compelled to update to 5.50GEN, you'll need to update to 5.50GEN-A first. Then 5.50GEN-B2. Then GEN-C. Then GEN-D2. If you do not do it this way, your PSP will brick. Do not use the XGEN Update if you can help it. I've heard many, many reports of people getting a brick from using it.
GEN-D2 seems to be the most stable version yet.