This works fine for me on 8.04
  Kernel parameters in /boot/grub/menu.1st are 
  kernel     /boot/vmlinuz-2.6.24-16-generic root=UUID=bla-bla ro 
console=ttyS0,115200

I thinks this is purely xen specific "xencons=off" is explicitly killing the 
console.
xencons={off,tty,ttyS}, Searching for xencons gives a lot of related hits

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Serial Console redirection no longer works properly
https://bugs.launchpad.net/bugs/160455
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