First we tell him he can't decrypt(unhash) passwords. And then we tell him the md5 password hashing sucks, get a different one. Which to do that efficiently requires decrypting(unhashing) all the passwords he currently has stored.
Not to knock you guy's but let's give him a solution not make him throw in the towel.
For comparing MD5 passwords it is the same as the sha1 example I gave above.
$newpass = md5($postpass);
Then just get the passwords from the database and see if they match.
As for maybe upgrading the hash technology you use I have never had to do it so lets see what the other guys come up with.