It really depends on what you need to achieve. Databases have a place, but flat files are also perfectly fine for data (via serialization).
So; what problems is the xml giving you? If you can answer that, then you'll know what the pain points are that you want to address. You mention "game", and indeed flat files tend to be more suitable (assuming you want minimum overhead etc), but either would normally do fine. Binary serialization might be more efficient in terms of CPU and disk (but I don't recommend BinaryFormatter
- it will bite you when you change the types).
I'm not anti-database (far from it) - I just wanted to present a balanced viewpoint ;-p