A.J.
If all he has lost is privileges, and he gets an incentive to be good, this is NOT firm enough to solve defiance in difficult kids. It just isn't. Don't worry, he can change, he just needs firmer handling. He's a BOY. Get the book Back to Basics Discipline by Janet Campbell Matson. It's loving and firm and excellent for instilling old fashioned respect. Once you get him straight on respecting his teachers etc, his being tired won't matter. He may get cranky, but he wont' be disrespectful and out of control. My kids would never do that stuff even when they're over tired.
Once you have effective discpiline in place, and you have used it so he knows you're not bluffing, you can tell him on the way to school that you have eyes in his class and if he is not respectful, X will happen. The teacher can only do something wimpy like "time out", but if he knows the real discipline will be at home, he'll avoid it. My kids know their parents enforce, not their teachers, and they know we monitor them through their teachers.
Don't pay him to be good, but if he gets through a good day, in addition to the fact he avoided FIRM discipline, it's fine to treat him to something special (quality time of some sort is best so you guys build a closer relationship) He will get used to having an excellent happy time ALL the time and firm swift consequences if he chooses to act out. He'll learn it's HIS CHOICE if you always stay calm and consistent about it. Julie L is right! The more you do now, the less you'll need later, and 5 is getting up there in age so don't delay!
Good luck!