Taking a night from Dubrovnik for Korcula is an easy call. The tricky bit is I’d probably still say five nights is kind of a lot for Dubrovnik, but then four nights might be a lot for Korcula! Adding Hvar as a stop and turning this into a real coast hop might be nice (Split -3 / Hvar -2 / Korcula -3 / Dubrovnik-3)?
A little of this has to do with your sightseeing objectives. If you’re planning on just enjoying some sun and swimming for some of these days, then Korcula is probably perfect. The swimming/beach options here are superior to Dubrovnik imho. Renting a scooter or e-bikes for a day trip to Lumbarda is an easy way to fill a day. If you’re more geared towards some “sightseeing” then adding Hvar, or keeping five nights in Dubrovnik with additional day trips is probably the way to go.
My take on Dubrovnik is a bit mixed. It’s certainly worth a few days and is easily enjoyed. But I think a big part of its appeal is getting out of it during the day. There’s no shortage of day trip options, and they are bookable on short notice. The flexibility is a benefit. Cavtat is pretty easy, and has some very nice swimming areas. With that in mind, defaulting to extra nights is easy out. As busy and touristy as it was, I didn’t exactly tire of the place.
I’ll always pick staying in the old center anywhere. It’s a value-add for atmosphere and convenience. The only reason I’d consider staying outside the city center is economic, which may be a real consideration for Dubrovnik.