Executing script on receiving incoming connection with xinetd
service testservice{ port = 5900 socket_type = stream protocol = tcp wait = no user = root server = /usr/bin/testscript.sh server_args = test}
You're right, I couldn't get yours to work. The above seemed to.
Make sure that testscript.sh is set +x and at the top contains #!/bin/sh (in your example it does appear that way)