I have been stalling on this for a year. I was going to get a bigger compressor, I was going to build a quiet-box for the compressor and shop vac both, I was going to mount the gauges and the drain outside the box, blah, blah, blah. In the meantime I was always leaving the shop when the compressor was on. I was always being startled when it kicked on, etc.
I finally took a little time after work and quickly cut up some particle board and some foam. The reduction in noise is amazing. This truly inspires me to build something better and build one for the shop vac too. In the meantime I won't get startled and put a brad through my hand ;-)
The piece on the wall added a lot of reduction. There is a three inch gap between the cover and the wall/wall-foam for air circulation and it is still a big improvement. I guess the moral is that just because you can't take the time to do it the way you REALLY want to, there's no reason for a stop-gap to make your shop time more pleasant.