I would reccomened getting the tailismoon fans gigabyte mentioned. At stock fan speeds, they are quieter by a good margin then the stock fans and they are cheap. But there are other big things you can do for free/cheap to help.
First , make sure you're running the console horizontal. Running it vertical greatly reduces cooling and increases airflow restrictions - the fans have to work harder to suck in air and that translates to noise. Under each foot of the console, put low density foam or soft rubber, this will absorb vibration and also raise the console up a bit to increase airflow, which will translate to slower fan speeds etc. And I would reccomend putting the console in a entertainment center with a glass front door. Just having that glass inf ront of the console makes a huge difference in DB. I'll be doing a full study of the noise level of the 360 soon look for my posts etc...
There are other things you can do to quiet the fans too. There are two sources of noise that the fans make. One, is the mechanical aspect of the fans- the vibration, and friction noise they create. Insulate the mounting of the fans with foam or rubber etc to reduce vibration. To reduce friction and help quell vibration grease the bearings or oil them occasionally with a good oil like 3-in-1.
The other source of noise is air turubulance/movement. Take the fans out of the 360 - and notice theyare much quieter. Run the 360 with the lid open and it'll be quieter too. That is because of the reduction in restriction to airflow.
A big thing you can do to help is cut all the steel out of the case where there are airflow "holes" - because there are ALSO holes in the plastic. Having two is redudant. This will reduce turbulance and will not only reduce noise, but also increase airflow which will increase efficency, and allow the fans to run at a lower speed and the box to run cooler. Cutting the grill out behind the fans is the biggest dent, then the side of the case opposite the hard drive is the other big one as that's the main intake vent. Then you could also cut the small vents along the top and bottom of the case, though that isn't as critical.
If you want to take it even farther, and aren't worried about things getting into the case or if you don't move it round etc - cut the plastic grilles out too. This will remove a ton of restriction. It will quiet way down. Or y ou could drill larger hole in the plastic to leave a grille but increase airflow. The tiny holes make for very turbulant air. Try blowing thru the plastic and you'll hear the noise even from that.
wd-40 can dissolve the grease of the fan.. it will run fine until the wd-40 has worn off, and then worse than ever.
Correct. White Lithium Grease spray would be a much better choice - if you're looking for something sprayable. People don't seem to realize that WD-40 is a bad lubricant. That isn't what it was made for. The WD stands for Water Displacer (number 40). It's a chemical made to spray on things that need to displace water (ie not rust). That's about it. The penetrating nature helps work it's way into cracks/crevices. It does lubricate but doesn't wear very long...