i've heard that keeping it vertically will cause less disk scratching, and no idea which way the fans blow though, how old is your xbox though, i know certain revisions run cooler than others
i thought it was the other way round, i.e., i thought that keeping the xbox 360 flat (horizontally) would reduce chance of disc scratching.
i reckon people say this because when you knock the x360 when it's vertical, it would quite easily fall over and the disc would grind against something inside the x360 when it's falling, whereas if you hit the x360 when it is horizontal, it won't move the disc much.
i keep mine horizontal and i haven't had any problems. i don't think having it either horizontal or vertical makes much of a difference with heat. when i put my hand behind the vent at the back of the x360, i can still feel a lot of heat being blown out the back when the x360 is horizontal.
as long as you keep the x360 in an open area and don't block the vents especially the one at the back, then i think it should be fine and you won't need to get extra fans to cool it.