This behavior in a five-year-old has nothing to do with sexuality. Don't make an issue of it. He already sees that some of his peers react negatively to what he is doing, so he is making an adjustment on his own. Many young children prefer toys and activities that are often associated with children of the other gender. If you become anxious about this, you'll convey this to him, and it will not help. Just try to enjoy him and expose him to a wide variety of play things and activities.
Would it be a concern if the child is now 10 years old and still prefers "pretty" things and chooses pink over other colors? Also, why would a 10 year old boy hide and paint his fingernails? Would this be anything that we should be concerned about?
I've recently switched age groups from teaching toddlers to pre-schoolers. One young boy, who I had in my class as a toddler now loves to dress and act like a girl, using long shirts to pretend it's long girl hair. The child is going to be four in november and his mom is concerned and does not want him to act in this manner at school. I disagree. I think he should act out and dress like a girl and the girls should dress like boys. I see no harm. I really need some advise on how to address this with his parents without going against their wishes. What makes it difficult is that his mom is a co-worker.