Tuning Xen for Performance
Tuning your Xen installation: recommended settings
If the dom0 Host-to-be has more memory than a typical laptop/desktop system has, then do not rely on dom0 ballooning. Instead set the dom0 ram to something between 1 and 4GB adding dom0_mem=1024M to the Xen command line.
1GB is enough for a pretty large host, more will be needed if you expect your users to use advanced storage types as ZFS or distributed filesystems.
The reason to not give all ram to dom0 is that it takes time to re-purpose it went domUs are started. On a host with 128GB Ram you're getting things stuck for minutes while dom0 is ballooning down to make space.