responseText returns a string, and it is just a string. If you need to parse data from it, it can only be done with string handling methods.
responseText is good if you're okay with using innerHTML, which as of so far is not standards compliant. You can just set the innerHTML of an object to the returned responseText and it will appear in the document.
responseXML returns an XML doc, that can be accessed and parsed using normal DOM methods.
You have more control over the data using xml, while using the string it is easier to retrieve bits of html that can be displayed as a whole.
Does that answer your question?
I'm going to go ahead and move this to the ajax discussion section.
Helping to build a bigger box. - Adam Matthews