I have also read about this same problem on several sites and, before starting the downgrade to 10.3.7 (after permissions repair, PRAM reset, OF reset etc), as several users recommended, I just tried to login as root. During the root session, the fan noise was equally elevated. I changed the settings in Energy Saver to "reduced processor speed," without making much difference in noise. Then I just logged back in my regular account, preparing myself for a backup and a reinstall.
Suddenly, fan noise started to decrease, and now my iMac G5 appears to be cured. I have no explanation for that, but I'm sure this is somthing related with permissions and system preferences. The strangest thing is that Temperature Monitor now shows values that are something like seven degrees Celsius lower than previously, under the same conditions of computer activity. Hope this helps.
[robg adds: I haven't heard of any issues with fan noise and the 10.3.8 update, and I can't verify that this fix works -- but I thought I'd run it and see if anyone else has any comments, one way or the other.]

