Summing up and fleshing out the comments: Generally, signing software updates is good practise and should definitely be done. However, you ask about the security of an unpadded RSA signature on an MD5 hash. There are at least two issues with this:
MD5 is no longer considered safe, and hasn't been for quite a while (we're already phasing out its successor, SHA-1, in favor of SHA-2 and eventually SHA-3). MD5 has been broken for a while, and in ways that make it unsuited for signatures. Edit: My old explanation was wrong. See the comments by @Gilles and the answer by @fgrieu for the details of why MD5 is bad. The conclusion of "don't use it" still stands.
Solution: Use SHA-256 or another up-to-date hash algorithm instead of MD5.
Unpadded RSA signatures
If you sign the hash with a primitive RSA signature without any padding, you can attack the scheme as described in this question and answer. This would, again, allow an attacker to forge a message with a valid signature. Even when using SHA-256 instead of MD5, the security margin is too low for comfort.
Solution: Use a proper padding like PKCS#1 v1.5 or, even better, PSS.
Please consider using an established method and (ideally) implementation for this purpose. Take a look at how other systems do this. Even though the potential attacks mentioned here may seem like they would not apply to your use case, it is bad practise to use methods you know to be insecure, just because you think the insecurities may not apply to your specific system. Using good algorithms and padding has almost no additional cost, but gains you the peace of mind that your system is secure, instead of "probably secure because the attacks probably do not apply to it, I hope".
Finally, the standard caveats about "don't implement the crypto yourself, use an established library" apply, and this question has a large number of good answers concerning best practises for cryptography and can serve as a good starting point for further research.