I've put a lot of thought (and money) onto this in the past year.

I finally ended up with a watercooled setup. My system now only has three fans : one in the PSU, one on the front of the case (to let the air in) and one on the back of the case attached to the radiator to let the air out and cool the radiator.

I modded my case so that 120mm fans would fit on the front and back of the case. I used Vantec stealth fans for this (panasonic Panaflo fans would've been my second choice). By running both fans at 5v instead of 12v they are silent.

The loudest component in my case is still my harddisk, although I'm using a Maxtor 200gig now with has an FDB motor. I would have preferred to use Seagate (because those ones are the quietest around), but I needed at least 200gig of diskspace @ 7200rpm and Seagate simply doesn't make such a disk (yet).

I'm very pleased with my setup. The watercooling rig is *very* quiet. I'm only able to hear it if I'm really trying to and even then the ambient noise in my room most of the time overwhealms it. (expecially if the window is open).

Overclocking is a dream. I can easily run my P4 2.4Ghz @ 3.0+Ghz and the system is rock-stable. When if I do this the CPU temperature doesn't rise more than 2°C. (normally the CPU temp is 34-35°C, well within the specs) .

I could post some pics if you would like to see it.

Some advice to get your system really quiet if you don't want to go the watercooling route :

1) Get rid of as many fans in your system as you can. Replace the ones that you simply can't get rid of for overheating purposes by silent fans and run those at 5v instead of 12v.
e.g. replace your CPU fan with a Zalman CNPS(Al)Cu and replace the fan on your video card with a Zalman ZM80-A-HP.
Casefans should be avoided, but if you still want them choose 120mm fans (if you can make them fit) and -again- run them at 5v. 120mm fans turn slower but, because they're bigger, move the same amount of air.

2) Get a quiet PSU. A model like the Zalman ZM300A-APF, the Seasonic SS-300, the Verax F300PPFC-80KP or the SIlenX 400watt.

3) Very important : choose a quiet harddisk. Since solid state harddisks are stil much too expensive and not an option, the best you can get is a harddisk with an FDB motor. The Seagate Barracuda IV is still the quietest (but getting a bit old now), the Barracuda V is only slightly louder. The IBM 180GXP is a close third but many people don't want to burn their hands on an IBM drive again after the 75GXP debacle. The Maxtor comes fourth and then Samsung. WD is, noise-wise, a big no-no. I myself am really curious when WD will introduce their first FDB drive because I really like the their special edition series.

4) DON'T invest any money in those acoustic damping material kits because it is my experience that they don't do much good.