According to this article application/xml is preferred.
EDIT
I did a little follow-up on the article.
The author claims that the encoding declared in XML processing instructions, like:
<?xml version="1.0" encoding="UTF-8"?>
can be ignored when text/xml media type is used.
They support the thesis with the definition of text/* MIME type family specification in RFC 2046, specifically the following fragment:
4.1.2. Charset Parameter
A critical parameter that may be specified in the Content-Type field
for "text/plain" data is the character set. This is specified with a
"charset" parameter, as in:
Content-type: text/plain; charset=iso-8859-1
Unlike some other parameter values, the values of the charset
parameter are NOT case sensitive. The default character set, which
must be assumed in the absence of a charset parameter, is US-ASCII.
The specification for any future subtypes of "text" must specify
whether or not they will also utilize a "charset" parameter, and may
possibly restrict its values as well. For other subtypes of "text"
than "text/plain", the semantics of the "charset" parameter should be
defined to be identical to those specified here for "text/plain",
i.e., the body consists entirely of characters in the given charset.
In particular, definers of future "text" subtypes should pay close
attention to the implications of multioctet character sets for their
subtype definitions.
According to them, such difficulties can be avoided when using application/xml MIME type. Whether it's true or not, I wouldn't go as far as to avoid text/xml. IMHO, it's best just to follow the semantics of human-readability(non-readability) and always remember to specify the charset.