From Wikipedia,

Xen is an open-source virtual machine monitor for x86 that enables the execution of multiple guest operating systems on the same computer hardware. This form of virtualization is achieved using a technique called paravirtualization. It is developed by the University of Cambridge…

It is a virtualization research project but now with a commercial backing. As the technology matures, more and more hosting companies are employing it in commercial offerings. While Xen allows the hosted virtual machines to run different operating system/kernel than the dom0 node, most Xen-based hostings are Linux VPSs.

This very website, HostingFu, is hosted on a Gentoo Linux Xen-based VPS at Unixshell#.

Why Xen?

• Xen is efficient with low overhead.
• Xen is open sourced and actively developed.
• Xen host cannot oversell, as dedicated resources (memory, disk space) are really dedicated.
• Xen allows you to compile and install your own kernel modules, which you cannot do in jailed VPS.

Why Not Xen?

• Xen is new, and might not have track records like other commercial competitors.
• Xen might still have stability issue (or is it just unixshell# specific?)
• Not enough hosting companies to choose from.
• As it cannot be oversold, it might not be as cheap as other jailed based VPS.