IE 5.5 is dead. The number of people using it are tiny, at least according to the stats on the most popular sites I run. Here are the numbers.
Has a larger proportion of Firefox users than Internet Explorer users due to the high level of traffic from some social bookmarking sites, meaning a more web-savvy crowd who are more likely to be using alternative browsers:

jokes-o-matic.com browser breakdown
The level of IE usage is still pretty high though, but even so only a single hit from IE 5.5 recently:

jokes-o-matic.com IE versions
A much more broad and ‘average’ user base with Internet Explorer dominant:

Recycling Group Finder browser breakdown
Still, only 6 Internet Explorer hits recently, a tiny proportion of overall visits:

Recycling Group Finder IE versions
What does this mean?

Yahoo.com as seen in Internet Explorer 5.5
These statistics, and others I have seen suggest that almost no-one uses Internet Explorer 5.5 or below any more. The small minority that do must be used to the internet breaking in unique and interesting ways due to the lack of support for more recent developments in CSS and really bad Javascript support (see right for yahoo.com as seen in Internet Explorer 5.5). I predict that a fair number of sites just don’t work in any usable way on anything less than Internet Explorer 6.
Time is money
Designing for multiple browsers takes time. The more browsers you need to support the more time you need to spend supporting them.
A recent project I worked on required a redesign of the site from the ground-up (aswell as a bunch of other stuff) and making the site work in any version of Internet Explorer lower than 6 just wasn’t worth the time, and therefore money, put into it. The return just wasn’t there and I decided that IE 5.5 was gone, dead, obsolete and I wasn’t going to try and mangle the design to work in it. Rather than just display a really crappy looking site to the user I decided I would let them know via a short and to-the-point message that their browser was not up to displaying the site and directing them to upgrade to a new version of their browser.
Give them the good news

Message displayed to all users visiting project in anything below IE 6
But how to do this? The site was developed in Ruby on Rails and I’d heard of a neat gem called rack-noie6 that provides a piece of Rack middleware that blocks Internet Explorer 6 and below, but that isn’t going to work in most cases. Hard as it may be to make your site look good in Internet Explorer 6 you can see from the stats above there’s still a large proportion of users using it and to turn them away would be crazy, at least while the pool of IE 6 users out there is still so large.
So a quick fork and patch later (github we <3 you so much) and the new noie6 was accepting an option for a minimum version of Internet Explorer it should accept instead of just rigidly blocking version 6 and below. Configuration is really simple:
Now any users visiting the site in anything below Internet Explorer 6 gets the message above helpfully directing them to update their browser. Not bad for a two line config update.