
Abraham spalding |

A 5 foot step only prevents AoO's, it doesn't prevent readied actions. A readied action is a delebrate maneuver taken (generally) in response to another person's action. Since it is not an AoO the character gets to take his readied action (that being an attack on the person who approached him).
Please note since this is not an AoO if the enemy then started casting a spell without casting defensively then the character could take an AoO as normal (since he hasn't taken one yet this round).