ZFS Sparse Volumes (Thin Provisioning) is the only way to fly, imho.  I do all 
of mine that way.  Performance has never been an issue of concern, although  I 
haven't done a comprehensive bench test.

As for Linux dom0 vs OpenSolaris dom0 performance, I can't say.  I'm only using 
Solaris.

As for stability, my personal preference is for SX:CE B121 which was when the 
integration of Xen 3.3 happened.  Releases prior to that (such as OpenSolaris 
2009.06 which is B111 unless upgraded) I'm not as fond of.  The stability from 
121 has been pretty solid, although I highly recommend disabling the Intel 
IOMMU feature if you have it.

benr.
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