Having watched the back-and-forth between the Xen and Linux community over this inclusion business a bit, I feel the delay has actually been worth it in hindsight. Linux's pvops abstraction is clean and impartial. With this Linux has support for at least 3 virtualization technologies out of the box: KVM, Xen, and lguest. Also, a lot of the jagged edges in the Xen dom0 patches have been smoothed in this process.
This is also great news for private and public Xen-based deployments as well as companies such as Oracle, Suse and others that built their own virtualization platforms on top of Xen. Trying to get supported, well-tested drivers for new hardware working with Xen has often been a major pain point and required significant engineering resources. This was a major reason why Ubuntu switched to KVM officially (Red Hat led the charge here but that was mostly because they bought Qumranet - the company that built KVM). With this Xen is significantly more maintainable and I expect to see at least some of the distros to re-include xen as a virtualization option fairly soon!