From the RFC (3023), under section 3, XML Media Types:
If an XML document — that is, the unprocessed, source XML document
— is readable by casual users, text/xml is preferable to
application/xml. MIME user agents (and web user agents) that do not
have explicit support for text/xml will treat it as text/plain, for
example, by displaying the XML MIME entity as plain text.
Application/xml is preferable when the XML MIME entity is unreadable
by casual users.
(emphasis mine)
This is an old question, but one that is frequently visited and clear recommendations are now available from RFC 7303 which obsoletes RFC3023. In a nutshell (section 9.2):
The registration information for text/xml is in all respects the same
as that given for application/xml above (Section 9.1), except that
the “Type name” is “text”.