Adding a USB device to the virtual machine fails in ESXi 5

After upgrading an ESXi 4.1 host to ESXi 5.0, you are unable to add a USB device to the virtual machine. The USB controller has been added to the virtual machine, but the USB device is not available.
This issue occurs if hostd loads before the USB Arbitrator in ESXi 5.0
To workaround this issue:
Connect to the host using SSH as the root user.
Open the /etc/init.d/usbarbitrator file using the vi editor.
Locate this line:
# chkconfig: 3 70 70
Change this line to:
# chkconfig: 3 17 83
Save and close the file.
Run these commands on the host:
chkconfig usbarbitrator off
chkconfig usbarbitrator on
Reboot the host.
Run this command to stop hostd service:
/etc/init.d/hostd stop
Run this command to stop the usbarbitrator service:
/etc/init.d/usbarbitrator stop
Run this command to start the usbarbitrator service:
/etc/init.d/usbarbitrator start
Run this command to start hostd service:
/etc/init.d/hostd start
For more information read the following article from VMware.