The most cost effective? That depends, the cheapest thing you could do is add resistors inline with your fans to reduce the voltage, thus slowing the fans down. Of course if your computer already runs hot, this may not be the best choice.
Watercooling generally does decrease your noise, but you will have to decide if the amount of money is worth the decrease in noise.
If you only have two fans, I don't see how your computer can be that loud, especially if they are stock fans. Some cases are loud, but generally stock cases are relatively quiet, so it won't be cheap to try and get it silent.
As for the rubber mats I assume you mean the sound deadening material that you can get, and not those rubbber covers for fans to stop vibrations. There are several sites here in the US that sell the kits to do one case for about $10, of course from your username I assume you are from Britain, so this probably doesn't help you much. I found this stuff at a local surplus store, they had a speaker section, and they sold pieces of mat in one foot squares for $0.95 USD, which is pretty cheap. You might want to check local speaker stores, or music stores.
What kind of temps are you currently running?
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