Some key things we have discovered while upgrading from Etch to Lenny on our DomU hosts. Useful docs are here.
Make sure that the following line replaces the tty0 getty line:
1:2345:respawn:/sbin/getty 38400 hvc0
Make sure to install the following package before rebooting or domU will not boot:
Make sure you change the kernel and ramdisk lines:
kernel = '/boot/vmlinuz-2.6.26-2-xen-amd64' ramdisk = '/boot/initrd.img-2.6.26-2-xen-amd64
Then shutdown the domU, then start it manually from the dom0.