I think I’ve decided that LVM disks is the way to go for ALL the virtual machines.
I just did an #hdparm -t xvda2 (root folder, which is file based) and got between 5-10MB/s
Did an #hdparm -t xvdb1 (LVM folder, which is a physical device) and got around 46-47MB/s.
It’s clear. LVM all the way!

Which is good, since in case of a catastrophic crash, where the OS drive dies, after I rebuild the dom0, and the LVM structure, the VM’s should work out of the box, since the physical disks they use will be based on the LVM structured names.

And to back up the LVM partitions that are used by VM as disks, I can use:
dd if=/dev/system/root | bzip2 > backup_of_partition.bz2
Maybe look at creating an LVM snapshot which then gets backed up….