With a peltier and air cooling via a _good_ heatsink/fan, you'll be able to cool your CPU to about room temperature. A water-cooled heatsink will allow you to get more extreme cooling. Listen to what the others have to say. Insulation to prevent condensation is VERY IMPORTANT! (I've had a bad experience with unexpected condensation) Unless you want to do this for fun and don't mind spending the time and money, it isn't worth the trouble. I did have time and was willing to spend the money, so I set up a peltier just so I could run my Celeron 300A at 504 in the summer instead of 464. Now, after having water drip onto my video card in humid weather, I'm not going to fool with the peltier again until I have plenty of time to figure out how to properly insulate the whole setup.
Peltier's aren't easy to use like heatsinks that you buy and just stick on your CPU with some thermal grease. You should read as many procedures and experiences as you can find - that should help you the most if you still want to get a peltier.