Windows Home Server is designed to do a few things well:
- Automated backup of connected computers
- Centralized store of media to be shared among computers over the network
- Remote access (via a web interface) to allow you to access shared folders and computers while not at home
- Disk management (Storage pooling)
Part of backups is having a sense of redundancy, otherwise if one drive fails you could lose important data (within the home server). WHS handles this by making sure that folders/shares that you designate 'important' (aka Replicated) are automatically kept on two physically separate disks (if available). In a virtualized environment, WHS wouldn't be able to make sure that files were duplicated on separate physical disks (unless you set something up through your XenServer, which defeats the purpose of using WHS for disk management anyway).
If you're not going to use WHS for disk management, then you're primary uses for WHS are going to be remote access and centralized backup/storage. Remote access will work well whatever it's hosted on. Centralized backups will happen auto-magically whenever you specify. If you're not using WHS for remote access or centralized storage/backups, then it's a waste of money. You can put shares on any virtual machine and make it accessible to your network to complement your HTPC, you don't need a Windows Home Server for that.
If however, you're going to use centralized backups, then get it. WHS works effortlessly with backing up your Windows based machines and makes it easy to manage multiple machines for a home user.