I warned that if the virtualization layer enforces the use of encapsulation boundaries that interfere with that abstraction, then virtualization becomes less useful. I put forward the use of a software iSCSI initiator on Debian under XenServer as a case in point. More here

First, what was the problem? If data volumes and server operating system instance are tied together, than moving an application to a new environment becomes difficult. This could be an application which has outgrown the capacity of a VM and needs to move to a physical server, or it might just be that for disaster recovery purposes you want to be able to have the flexibility of attaching that data (whether that volume, or a replicated snapshot promoted to a new volume elsewhere) to any server (physical or virtual) that can host the application.