Snowmizer,
We've tested Linked Clones on small scale for a lab environment and it's working pretty well (not using VMware View). We're not even using an enterprise level SANs (high performance/etc), standard HP SAN. Linked Clones in VMware View basically allows you to take a single pristine copy of a Master Virtual Machine and allow you to deploy many Linked Clones copy from this single master. The way it works in VMware View as I understand it is, you bring in a Master VM, install VMware Tools and View Agent and then snapshot the VM in it's offline mode. Then what happens is a "Replica" VM is basically copied which acts like a mini-master and then Linked Clones are snapshotted off of that replica. This allows you to deploy say 10 Linked Clones who's reads will go back ot the mini-master and all writes (deltas) will go back to their respective Linked Clones. In terms of performance, I too can't speak on a large scale, it would depend on the SAN and other environmental variables. There is an option in VMware View for a given pool to allow you to basically wipe the deltas after a user has logged off, this would take care of the issue of snapshot growing too large over time.
I believe it's been mentioned a few times but for Linked Clones to really take off, folder redirection and application virtualization needs to be utilized to really get this concept going. You still have the issue of updating your Master and having to redeploy when you have to run patching on your Virtual Machine which per VMware View they're calling this "recomposing, reblance, etc". I'm still not sure of the technical details, but I assume the Linked Clones have to be redeploy, they will not automatically get updated to the current active Linked Clones since their base image could have changed and any changes written by the delta could expect certain things out of the base OS. Linked Clones is not a new technology, it's been around since the early days of VMware products, but View gives is a new way of deploying and managing Linked Clones in a larger scale.
I can't speak to Xen either, hopefully this answers some of your questions