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Would I be right in thinking that VDSManager could be installed on Debian 5 with the VDSManager Linux licence for managing a Xen Hypervisor?
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Yes, when you install VDSmanager-Linux you can choose type of virtualization.
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Also, how much space would VDSManager need for the install on the dedicated server?
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~100Mb (VDSmanager core data in /usr/local/ispmgr folder + apache web server) and all other free space (in Gigabytes) for disk (virtual server) templates and VPSes.
We are recomend mark all disk space by one partion / for Xen and two (/ - 4-8Gb /vz - all other space) for OpenVZ
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Can VPS instances be created via the VDSManager API?
Can user accounts be suspended/unsuspended via the API?
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Yes, VDSmanager can be controlled through the API via https requests.
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Can they be assigned more than 1 IP?
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For the virtual server, you can add as many addresses as supported by virtualization technology.
VDSmanager-Linux - it's only graphical interface for OpenVZ, Xen and VServer technology for easy VPS management.