Yesterday and today there's been patches published by Oracle's Konrad Rzeszutek Wilk that make it possible for open-source GPU Linux drivers that use the TTM (Translation Table Maps) in-kernel memory management to work within Xen virtualization. The TTM drivers include the open-source Radeon and Nouveau DRM drivers, among others.
Konrad cleaned up the TTM memory management framework to utilize the PCI API and some other technical changes so that these open-source drivers can now play well with Xen. The technical details can be found in this mailing list post
There's still time for this work to possibly land in the Linux 2.6.38 kernel, but the number of people using Xen virtualization is down, though it's good to see open-source contributions come from Oracle. We're still waiting for a KMS and Gallium3D driver for KVM virtualization, and then we can really get excited.