That claim was true, oh, about 6 months ago or so. Not sure of the exact date. But as NogDog has said, PHP 5 is already at the second minor build.
Warning: Speculation to begin...
It quite possibly could be that many hosts fear upgrading from PHP 4.x to 5 because it will break some programs / scripts. Many people still use register_globals as on so anything in the $_POST array is already [man]extract[/man]ed into variables. This is a security issue, and has been fixed in subsequent versions of PHP.
Now PHP 5 is considered stable. Stable enough for some hosts to provide concurrent versions. If you can get your friend to cite specific examples of how PHP 5 is more unstable that PHP 4, I'd be interested. Both have their pluses, and each has their minuses. But there's no reason not to use PHP 5. If you don't use the OO stuff that PHP 5 has, or you don't deal with XML too much, it won't matter to you. If you want OO or an easier XML integration, PHP 5 does just that.
I'm working on getting both running at once.... that's a chore....