I'm no expert in compression, so its no surprise that I've never heard of xz. What are it's strengths compared to gzip, or b2z? Efficiency? Convention?
You've probably heard of LZMA, xz is merely an implementation of this (7zip and rar also use LZMA). The most notable differences to bzip2 are significantly longer compression time and rather moderate decompression speed increases. This makes xz quite good for packaging data for distribution, although it takes a lot longer to compress, it decompresses a lot faster (unlike bzip2) and saves a significant amount of space.