Take a look at the generator box I built for the honda EU1000i and 2000i series generators ( http://eplaya.burningman.com/viewtopic.php?f=3&t=36210
) and maybe you can glean a few ideas. Let me know if you have any questions; I'd be glad to offer my experience and lack of wisdom. If you want to come see it on playa, I should be listed at information and the artery (probably under the name Trainwreck).
If you take the forced air approach, you have to ensure that there is enough air flow coming in in order to sufficiently cool the engine of the genset. We're probably talking in the ballpark of a couple thousand watts of heat being generated by even a smaller (1000 to 2000 watt) unit. Also, regardless if you choose to make a baffle design like jkisha suggested or more of a forced air box like mine, make sure the wood/carpet/sound damping foam is far enough away from hot engine components so you don't end up with premature immolation. Also keep in mind that some generators like to 'hop' around when they are upset-- running out of fuel, clogged air filter, sudden large load, etc. You may want to consider anchoring it to the floor/ground so it doesn't hop its way into something flammable (or walk away with a stranger on burn night... heard it happens, sadly enough).
If you want ideas for next year and have a larger set, come take a look at the generator box I designed and helped build for the honorarium project Nelumbo Nucifera
). I think we're going to be placed about 6:05 at 1900' or something like that. Just walk from center camp towards the Man and we'll be on the left hand side about 1/3 of the way down. Should be up and running by next Friday for those of you who want to take a peek. It's protecting a Yamaha 2800i running on propane-- had to use eight 109cfm fans and two 4" louvered exhaust vents to keep the thing happy and cool. Probably reduces the noise by about a half and has the added benefit of modulating the sound down to a lower (and less annoying) tone.
Whatever you build, just make sure that it's built well enough that it doesn't end up rattling and causing even more noise.
The CO makes a good point about honda generators being worth the extra coin. In our camp I only use honda. They are so quiet that our neighbors a couple years back (even before I built the box) thought we were running on batteries/solar. Also, what's better than a generator box (and free!) is some planning and empathy towards your neighbors, as The CO and phil already pointed out. Keep your generator near camp so you know just how much of a disturbance it is. Wait until a decent hour to fire your generators up and shut them off at a reasonable time as well... though it all depends on what part of the city you are in and who your neighbors are. Got a big sound camp next door? Fuck 'em and run that genset 24/7. I find talking with neighbors and checking in to see that you aren't being a nuisance is a great way to ensure you aren't twisting someone's panties in a bunch, as well as it makes for a good excuse to get to know the people living around you.