I can completely understand the packaging problems. In fact, I tried to manually install libxml2 from source a while back for some reason or another, and had an exasperatingly difficult time of it.
I'm content to wait a couple months for the new Debian release, but I'd like to respectfully make a couple tangential points:
1) I think I speak for most users when I say that -- all things being even -- I don't like to install core packages such as PHP, Ruby, libxml, etc. in my home directory because I don't want the burden of installing them and resolving their dependencies, then keeping each component up to date over time. This sort thing is something I'd prefer the server admins to do.
At the same time, I understand that you want to rely on Debian's package management system as much as possible so that your systems don't veer into unmaintainability. But is there any possibility of finding a Linux distribution that is reasonably stable but perhaps runs on a slightly more aggressive release schedule? Another possibility would be to offer Debian stable servers for the majority of users, but to offer slightly more bleeding-edge setups for users who need newer software, with the proviso of course that the latter servers may not be completely stable.
2) Any time an upgrade such as this introduces unexpected changes to the prior configuration, could this information be included in the upgrade announcement? Any upgrade is going to cause some pain, but I'd prefer to avoid surprises like this when possible.
(BTW, I'm impressed with the fact that you made the upgrade to PHP 5 optional and configurable via the panel.)