What do you recommend? OpenVZ or Xen DomU?

I am a fan of OpenVZ. I am also a Proxmox user.

OpenVZ is "just" a hardened chroot (with fine grained control and networking). The kernel is the same in the "containers" and on the host itself.

OpenVZ is lightweigth because of its design. It works perfectly fine as long as you need linux guests only. If your hardware supports hw virtualization you can use KVM (which is also in Proxmox) and you can do "full" virtualization and run wider range of operating systems.

I would not recommend Xen. You can get most features with KVM which is much more easier.

UPDATE

@ulf: In performance openvz is way better because there is almost no performance overhead. It is native system calls with a few more "security check". But as I said if the guest is not linux it is not an option. If one wants sophisticated networking it is doable, but it can be a pain.

When using Xen there is another layer (the hypervisor itself) involved which just passes over most of the calls verbatim most of the time, but does some translation/emulation for the others.

http://magazine.redhat.com/2007/08/23/automated-failover-and-recovery-of-virtualized-guests-in-advanced-platform/

try above link may help you :)

Proxmox is very good IMO, and has a lighter-weight implementation of libvirt than other KVM platforms.