I have two computers with i7 920 chips and will soon be building a third. My experience is that air cooling will do that job if you are overclocking up to 4.0ghz, but you have to get a good heatsink. A thing to consider is that these computers run 24/7, running F@H, so they're fairly loaded. This is my experience:
My first i7, running a CO chip, has a TRUE with two fans on it and keeps the temps in the low 70c range at 3.8ghz. Running it up to 4.0ghz raises the temps to about 80c. I was told that a Coolermaster V8 was a good cooler for less money, considering it came with a fan, so I tried one on my second i7 that has a D0 chip. The V8 did not cool as well as the TRUE and I added a second fan. Even with two fans, the temps with the V8 run about 83c at 3.8ghz. I replaced the V8 with a Noctua D14 and the temps dropped 10 degrees (72c). All temps are as measured by Coretemp. I plan to get another Noctua D 14 for the next i7 build. One other good cooler is the Coolermaster V10, but it has a couple complications and does not allow ram that has tall heatsinks, besides being a lot more expensive.
I don't think the H50 will do the job, as others have said. The i7 is a hot running chip, reminiscent to the Prescott chips of years ago, so demands a good heatsink. The H50 is not good enough in my opinion. Of course, it also depends on how far you overclock. The H50 might work well enough if you only clock up to the 3.2-3.4ghz but even then a Noctua U12P would be better
http://www.newegg.com/Product/Product.aspx?Item=N82E168... for about the same amount of money. Yes, admittedly I like Noctua heatsinks and fans a lot. They are near silent and cool well.
As to water cooling, my limited experience has been that it works very well, but is expensive and takes a fair amount of maintenance. After one venture with it, I decided not to do it again. Others may not mind these problems.
As to the i7 verses i5 platforms, I prefer the i7. It appears to have a longer platform life and will soon have 6 core chips available for those who wish the computing power. But to each his own.