I don't know where you're getting your numbers from, but Xen doesn't have a 5x performance penalty. I'd believe you if you said that QEMU or Bochs had a 5x performance penalty, but Xen is more along the lines of 5%. (Of course, if you run an instance and give it a small fraction of a CPU, you get what you pay for.)
With full virtualization, you can run unmodified operating systems (in theory, at least). VMWare is an example of a fully virtualized system. Recently Intel and AMD added features to their CPUs which make this much easier.
With para virtualization, the guest operating system is aware of the hypervisor and cooperates with it -- for example, rather than modifying page tables directly, it sends a message to the hypervisor saying "please map this page for me".
(There's also a hybrid 75%-virtualized model, where the system is fully virtualized except that some devices are exposed via hypervisor calls -- this is seen most commonly as Xen "HVM with PV drivers".)
Not everywhere. Last I checked we do considerably better for 10GbE, for instance. We certainly consistently lag behind Linux for desktop hardware support, but I think we hold our own pretty well in the server space.
As a BSD hacker who hates anything hardware-related, however, I do love the idea of outsourcing such irritants, though.
SCSI/SAS support has been rotting slowly, with the now industry-standard LSI cards I tested, working, but without interrupt coalesce and thus using more CPU and reaching only 60% of the speed of the same card in Linux or Opensolaris. Infiniband support is nearly all happening in Linux.
Then there was the problems with the new Core i7 CPUs and Turbo Mode. NUMA support has been missing until 9.0(unstable), and even now its only for the allocator and not the scheduler. The final straw was when I had USB issues (modern server motherboards have mostly dropped PS2 ports) which meant keyboard wasn't working at all on a server.
ZFS is less stable and slower than in OpenSolaris, and for all these years FreeBSD has lacked a journalling filesystem. Which I consider basic stuff, after all, Linux has had XFS for 10 years now. Linux has several virtualisation options, and while VirtualBox has been ported to BSD, it isn't really suited for server use. FreeBSD Jails have stagnated for years and still cannot handle running multiple copies of PostgreSQL because of SYSV support.
I believe FreeBSD is the best and most enjoyable OS for hacking on, but this was 2 years ago, and things have further stagnated since then, so like many others, I have been forced to give up and move on.
