The supported way si to upgrade collectors and extensions service to 6.5 and then you can upgrade to 7.0. But keep in mind that in 6.5 names of Management Packs are different because of product name change and because of other reasons, so there is no way to "update" 5.7 MPs, but they can live side-by-side with 6.x and 7.x as long as required (to preserve historical data for instance). Also keep in mind that for v7 we recommend to install VES and Collectors on a management server (actually VES 7.0 cannot be installed on a simple agent anymore).
6.5 documenation with upgrade section an be found herehttp://helpcenter.veeam.com/mp/65/guides/index.html?upgrading_from_nworks_mp_5_7.html
7.0 documentaion with upgrade section is herehttp://helpcenter.veeam.com/mp/70/vmware_guide/index.html?installation_guide.html
Thank you for such a great question and let me know if you have any other questions.