With xen, you are able to run different operating systems independantly, with openVZ, all these operating systems are sharing the same linux kernel.
The pro's and con's in my opinion are:
+ Run really independant operating systems that dont share the same linux kernel
- Higher overhead then OpenVZ
- The filesystem of the guest os is in a file that can not grow automatically when the guest needs more space.
- All guests share the same linux kernel
+ All guests share the same harddisk, you can give a guest more HD space by simply setting a higher quota value
+ Very low overhead, you may many VZ on one server. ESpecially build for ISP hosting enviroments
For testing purposes, I personally prefer none of thie two. I use the free VMWare Server. In VMWare it is easy to install a unmodified OS for testing, the virtual harddisks may grow when you add more data and you can set breakpoints where you go back when e.g. a software installation fails. But VMWare is much slower then Xen and OpenVZ due to the hardware abstration, but this does not matter so much in a testing enviroment.