As Dagon suggests, using an XML file as a database is generally going to be much slower than using a purpose-built DBMS such as MySQL, PostGre, etc. Also, you lose all the functionality that such DBMS's provide "out of the box".
Generally, XML is best used for what it was designed for: exchanging of data between discrete applications. In fact, it is not uncommon for applications to generate XML output "on the fly" from data queried from a database.