Jails are actually very efficient, and well understood and have been tested extensively by the freebsd project. User Mode Linux or handbuilt chroot 'jails' under linux are less efficient (binaries have to be in the chroot and cannot be run from the host filesystem). User Mode Linux is effectively a kernel and userland running under a users UID; it's one of the least efficient forms of virtualisation. Both of these solutions would fall under the class of pseudo-virtualisation, since they depend on a host filesystem and processor, and usually it's less easy to partition memory and harder to guarantee process isolation.
Xen, VMWare and Parallels are all examples of para-virtualisation, where multiple OS's share the underlying hardware, but have their own resource limits in terms of disk and memory access. And the hypervisor exists to manage the timesharing and access control, but the guest OS's are executing directly on the hardware.
From a hosting company point of view, jails on a BSD system are the most tractable and resource efficient, followed closely by any of the paravirtualisation solutions. UML as a hosting solution is kind of cheesy (it's great for networking simulations though). From a customer standpoint, a paravirtualisation solution offers more flexibility and power.
I've offered jails in the past (2004-2005) and currently offer Xen VPSs. Yes, Jails make more efficient use of ram and other hardware; however, Xen makes more efficient use of SysAdmin time. Now, the FreeBSD jail functionality is getting better all the time, and it's much better now than it was, but it just doesn't provide the same level of resource isolation that Xen provides.
On xen, I don't have to worry about runaway user processes. Xen deals with the problem for me. this was not the case with Jails.
So yeah. I like Jails for cooperative environments, but there is a reason why I'm selling Xen VPSs now, not FreeBSD jails, and it's not 'cause I like linux more than FreeBSD.
