After alot of google-ing for iscsi powered live migration i found references to these two block-iscsi scripts:
http://kinkrsoftware.nl/contrib/xen/block-iscsi
http://www.suse.de/~garloff/linux/xen/scripts/block-iscsi
However none of them worked “out of the box” with Debian Lenny. After alot of messing around with adding debug output in the scripts i found the script in the first link to work when i changed the path to iscsiadm from /usr/sbin to /usr/bin (since the open-iscsi lenny package installs iscsiadm to /usr/bin) and when using the following in my VMs .cfg:
disk = [ 'iscsi:iqn.2006-01.com.openfiler:tsn.64b04dcbd835,hda1,w' ]
Dont forget to stick the block-iscsi script in /etc/xen/scripts and chmod +x ! 