When using XEN virtualization it's good practice to use LVM volumes as raw disk devices for the vm guests. The main advantage is that there is no file system for the Xen host to manage and the guest has direct access to the physical volume = better performance!
Another advantage is that you can leverage LVM snapshots adding a similar function to your Xen setup as known in VMWare.

One drawback when using LVM for your virtual guests is that the vm's disk is less portable. There are tools that can handle LVM imaging, but dd is the OSS tool giving you a 1:1 copy of your disk. It's free & it's proven.
dd's known drawback is that the dd dump files get big and time to backup/restore a LVM volume can be lengthy.

Here's how to speed things up and also save on space needed for your LVM images & backups by combining dd with gzip. On modern hardware you can get speeds up to ~90Mb/sec - meaning you can restore a template or image of 15 GB in 3 to 4 minutes.