Did you check out the Upgrade documentation? I think that should answer most of your questions.
I'd personally be inclined to install Tiki 5 to a new location (since so many files have changed or been removed completely), and then simply point Tiki 5 install to your original database. The installer should take care of making changes to your database (removing/adding tables and columns as needed).
I'm guessing you're gonna have some major breakages though, since a lot has changed between versions 2 and 5. Not to be pessimistic but don't expect to up and running in a matter of minutes. Definitely backup all of your files and the database before you do anything. Of course, it all depends on what features you've used and how deeply you've configured things. It's really impossible to say for sure how things will go, but always give yourself a path to go back in case things fail miserably.