Here's one of the more accurate articles I've seen on the current state of Linux and Hypervisors.
I spent some quality time with Simon Crosby (XenSource) and previously with Jack Lo (VMware) as everyone was working to find a good solution to getting Linux to directly run on a virtualized platform. Of all the news articles on this that I've seen so far, this is definitely the most accurate.
On a similar note, whether or not Xen is ready for prime time, we at IBM have done a lot of testing in support of Novell's inclusion of Xen and believe that it is ready for Enterprises to begin testing and evaluating for use in Enterprises. It is still relatively young in capabilities compared to System p and System z virtualization capabilities, but it seems to provide the basic capabilities for IA32/x86-64/EM64T systems quite nicely. This article calls out Novell's position at this point.