Comparing XenServer and VMware Server is like comparing apples and oranges. While VMware Server is impressive, it is very much like an emulator: It runs on top of another operating system and has to work harder to execute privileged commands. VMware ESX is a bare-metal hypervisor that is better optimized to do virtualization. While it is still doing "emulation", It is a much better comparison to XenServer than VMware Server is.
TFA is slashdotted at the moment, so I don't know if VMware Server or ESX is being compared. Either way, the advantage of virtualization is not performance, it is flexibility. The raw performance may be less, but it gives you the ability to do things that just aren't possible with a physical machine. The ability to hot migrate from one physical machine to another in the event of hardware failure or replacement and the ability to have entire "machines" dedicated to single purposes without needing an equal number of physical machines are, at best, more difficult if not impossible when not using virtualization.
Don't get me wrong, I'm no VMware fanboy. It certainly has its rough edges and is certainly not perfect. However, virtualization as a technology has undeniable benefits in certain situations. Absolute performance just isn't one of them right now.