Hi,
1. What type of computer/server is used in the local subnet? Can I piggyback off of the WSUS server since it will also always be in the subnet.
--> Yes. Any machine acting as a SEP client can be promoted to GUP role. However it's recommended to promote the machine which has a better hardware configuration.
2. Do I then set the ip address of the 5 GUPs from the main SEPM console?
--> You will have to configure it through liveupdate policy
3. I am just now going to the latest version of SEP as I am on 12.1 now. That means all the clients have the wrong sylink. If I use group policy to upgrade the existing SEP and use a package off of the new server will it upgrade the sylink from the old local subnet to now my new centralized one?
--> Yes it should. You can use SEP 12.1 new feature i.e. Communication Update pacakge deployement.
SEP 12.1 RU2 and Reset Client Communication
https://www-secure.symantec.com/connect/articles/sep-121-ru2-and-reset-client-communication