http://www.iemc07.org/full-server-virtualization-versus-para-virtualization-which-is-best.html
Server virtualization comes in several flavors, two of which are full virtualization and para-virtualization. Both types treat virtual operating systems as “guests” with the virtual “hypervisor” serving as the host. Which is the best choice? It depends. Here’s a quick look at the differences.
Full Server Virtualization
With full server virtualization, the hypervisor serves as a dividing layer between the server hardware and the virtual server. It mediates access to the server’s hardware controllers and its peripherals. Operating systems installed using the full server approach are unaware of the virtualized environment. Both Microsoft and VMware use a full server virtualization approach.
An advantage to full virtualization is that most operating systems can be installed without requiring modifications. Full virtualization allows for taking snapshots of each virtual server. These snapshots can be used to provision other virtual servers as well as aid in disaster recovery. A disadvantage of full virtualization is that it is demanding and processor intensive. Not only must the hypervisor manage virtual servers, it must keep them separate.
Para-Virtualization
Citrix Xen uses a para-virtualization approach. Para-virtualization provides superior performance over full server virtualization. With this approach, the guest operating system is modified so that it becomes aware of the virtual environment and plays nicely with the hypervisor host. However, it requires specific changes to be made at the kernel level. Because of these changes, para-virtualization is only suitable for use with open source operating systems. For example, you cannot use para-virtualization to virtualize Microsoft Windows due to the proprietary nature of the Microsoft operating system.
As with storage virtualization, choosing the best server virtualization approach depends on what you want to accomplish, existing hardware, and business needs. No matter which approach makes the most sense, ongoing support and maintenance will be required.