The big advantage to the PowerMac version is tat you can add drives bare. The Xserve requires Apple drive modules (not sold empty), which are gonna cost you.
Additionally, the PowerMac version has better accomodations for PCI slots. The Xserve does very well as a server, or a workstation, but if you are gonna make a server that is also a worksation (a bad idea), you might need more slots.
Ouside of that, if you don't have a rack (or rackspace) the Xserve design is unwieldy. The Xserve is also loud, so it belongs in a server room, or a sound deadening enclosure.