Fan size was interesting. We originally wanted to put in a single 80mm fan. But we couldn't fit it in the final form factor chassis.
We couldn't just go with one 60mm fan because it would not provide the required cooling—as the diameter of the fan increases the air flow performance per revolution increases exponentially. So we ended up putting in two 60mm fans, and we came up with a water-cooled heat sink as well for the CPU. We've actually applied for a patent on that one.
The water cooled term is being used loosely; actually it is a heat sink constructed of a copper base, aluminum stamped fins and copper heat pipe. The heat pipe contains water and a vacuum is pulled on the pipe prior to sealing.
Water under a vacuum boils at a lower temperature than at atmospheric pressure, so when the water boils and becomes steam, the steam rises and moves the heat higher into the fins where the air flow from the fans can extract the heat more efficiently. Once the steam is cooled it condenses and flows back down the pipe as water to the copper base of the heat sink, which is attached to the processor to continue the condensing and cooling processes cycle.
XBox 1 week from today. HOO HA. Also today's Halo 2's 1 year anniversary. Happy Birthday!