The space savings are impressive and it does lend itself to a number of real-world situations but you also need to highlight the shortcomings of the XML data type as shown in SQL books online

http://msdn.microsoft.com/en-us/library/ms189887.aspx

Limitations of the xml Data Type

Note the following general limitations that apply to the xml data type:

The stored representation of xml data type instances cannot exceed 2 GB.

It cannot be used as a subtype of a sql_variant instance.

It does not support casting or converting to either text or ntext. Use varchar(max) or nvarchar(max) instead.

It cannot be compared or sorted. This means an xml data type cannot be used in a GROUP BY statement.

It cannot be used as a parameter to any scalar, built-in functions other than ISNULL, COALESCE, and DATALENGTH.

It cannot be used as a key column in an index. However, it can be included as data in a clustered index or explicitly added to a nonclustered index by using the INCLUDE keyword when the nonclustered index is created