I’ve had some issues with Xen crashing when I wanted to create a DomU for which the Dom0 had to shrink (see bug report). Therefore, it’s better to force a memory limit on the dom0. That is done with a kernel param.
Add this to /etc/default/grub:
# Start dom0 with less RAM GRUB_CMDLINE_XEN_DEFAULT="dom0_mem=512M"
And make sure you disabling ballooning of dom0 in /etc/xen/xend-config.sxp:
Then run update-grub2 and reboot.