Using block storage (partitions or LVM LVs) vs. file storage (disk image files on some Dom0 file system) IMO depends:
- block storage is typically less flexible than file storage (changing partitions is more interruptive than creating new files)
- file storage has more overhead (writes have to go through the Dom0 file system)
- block storage interferes less with Dom0 file system activity (only at the device level, and only if you need to share the same disk device or HBA (i.e. a single SCSI adapter)
- file storage can make use of excess RAM at Dom0 level, as a write cache
- clustering block storage may be easier and more performing than clustering file storage
So it depends on a number of factors. Generally, I'd try to separate Dom0 and DomU storage as much as I can: separate disks and even controllers, if possible. Once clustering comes into play, I'd look for SAN (FC / iSCSI) solutions, rather than using native Dom0 storage.
Just my opinion, of course...