I have been a dedicated xanga user since xanga started, and I have learned a lot from using it over the years. The main thing to remember is that Xanga users are pretty smart. Most of them are nerdy asians, (I mean that in a REALLY good way) so they won't fall for fake pages and scams. at least, direct scams. The rest of the users are those interested in weight loss, porn, and looking pretty. (I.E, make up)
When setting up a xanga account, don't go with default. Make an effort to use the old school layout options. Make it spiffy and clean, as to attract more subscribers.
With the many xanga networks (lovelyish, mancouch, etc) you can easily submit articles to them and ask to be either 1. a guest poster from another website (they add in your link), or just a regular poster. This is a GREAT way to draw more attention to your xanga page, where you can post links to your other sites.
Also, amazon associates and adsense is enabled on Xanga. You can utilize those by using Xanga premium (which is actually pretty affordable.)
If you are a female, using xanga is much much easier for traffic generation. Xanga is a tight knit community, composed of obsessed girls trying to lose weight and obsessed girls trying to look beautiful. If you have a health niche and are extremely knowledgeable, you can make your website get about 50 more unique hits a day. In the past, my girlfriend has been able to have a Xanga site generating 2,000-3,000 hits per week.
The most important thing that I have learned is to be social and personal. If you don't have the time to do that, and be a "real" person, then Xanga MIGHT not work for you. If you are a "real person" and trying to promote real things and real information, then Xanga can be your absolute BEST tool yet.
Last, even though Xanga users can sniff a scam of some sort and just ignore it, they ARE sheep. They will follow links you post on your page and side modules, especially if you have pretty shiny graphics.