historically, virtualization systems (VMWare, QEmu, VirtualPC, etc) on x86 
had to use heavy emulation techniques to compensate for the lack of real 
hardware virtualization. 
Xen uses a different tradeoff, it relies on modifications to the guest OS. it 
doesn't need any new processor feature, and doesn't use it if present. 
of course, as we all know, that doesn't work with closed source OSs, so the 
Xen people began to work on a real virtualization feature. The tradeoff chosen 
was to make it depend on the new hardware features so it wouldn't get much worse 
overhead than the already working paravirtualization. 
In short: 
without Pacifica/VT: 
- paravirtualized guests (linux, bsd, solaris): very low overhead
- unmodified guests: can't run. 
with Pacifica/VT: 
- paravirtualized guests (linux, bsd, solaris): very low overhead (same 
as
before)
- unmodified guests: run with somewhat bigger overhead; but not so bad as old 
software-only solutions. 
or, another way to see it: 
modifiable OS: can run paravirtualized, very low overhead. doesn't need nor 
use any new virtualization feature of the processor. 
non-modifiable OS: need Pacifica/VT processors, get higher overhead on disk 
and graphics. 
there are some plans about using some new CPU features even on 
paravirtualized 
domains to get lower cross-domain switching times, or easier PCI 
administration, or to mix 64bit/PAE/32bit guests.... but all those are in the 
future.