I tried to upgrade my Xen server from Feisty Fawn to Hardy Heron some time ago.
Now, I gave it a second chance, but the same problems occurred again. However, I now found out, what has to be done in order to make Xen work after the upgrade to Hardy:
I removed all Xen-related packages (bacause they were still Xen 3.1 while Hardy ships Xen 3.2) and purged the configuration files (after I had made backups). Than I installed the ubuntu-xen-server meta-package.
Package configuration failed, so I had to boot the standard ubuntu-server kernel (without Xen) and run dpkg --configure -a.
After this, I booted into Xen mode, however I could not connect using SSH, although I got ping replies from the server. Then i figured out, that the server did not boot correctly because the /etc/init.d/loadcpufreq and /etc/init.d/cpufrequtils scripts hang and block the startup process. Therefore I deactivated them using update-rc.d and voilà: Xen is working flawlessly.
I hope this articles helps anyone, who runs into the same problem.