As you may have read it in the latest DWN, Xen is now (almost) supported by Debian. Actually, it is currently stucked in the NEW queue since yesterday. The packages are also available on our Alioth webspace.
Special flavor of glibc, libc6-xen, is also upcoming, thanks to Aurelien Jarno !

Err, what else to say ?
That the Xen upstream sources are not very clean for now. There's still a lot of tools not needed that are furnished, the sources are a mess, and there is no stable API for now. You may have seen Xen kernels in experimental, but the kernel team has removed them for now. It will probably not be possible to distribute Xen-enabled kernels as long as Xen won't be more stabilized. I really wish that it will be integrated in kernel vanilla sources, since this could calm down a bit big changes, and help having a more stable version.

Just see that between 3.0.1 and 3.0.2 version, the way used to compile Xen kernels changed from a special arch xen to a subarch xen. That's better, for sure, but such important changes in the same major branch are quite disappointing.

Finally, I would say that Xen is now usable with Debian. I use it for more than 6 months now, and it is quite stable, no huge bug. You will just have to wait that #346387 is fixed to compile your own kernels with patches we provide.