it could be failing, youll only know if you try..
I generally try to blow them out with compressed air first
before replacing. if replacement doesnt work you may be surging
or have a bad power supply.. I try to clean those out as well (unplugged of course..)

Has that CPU fan got a label stuck over the spindle on top? Try carefully peeling back the label and applying a drop of oil (sewing machine oil is best) to the centre spindle, which you'll see under the label.

If the bearing is starting to dry out that'll fix it for a while, but you should really consider another fan if this is the case.

Yes it has got a label, i will try what you said with the oil. That will be temporary solution but the permanent solution is to replace the fan. Whats the best heatsink/fan for an XP 2800? i was thinking volcano 12.

If it's a bad bearing, adding oil will only postpone the inevitable, and oil is a dust magnet which has a tendency to magically migrate on its own. I have been known to pinch a penny till Ol' Abe sheds a tear, but even I would invest in a new fan.

The fan seems to be running alot faster now & cpu temp stays in the 40's before it used to go up to 70-80 sometimes 90. Its been fast now for a few days. Dunno if i should still replace it.

If that improvement was after using oil as described, then yes, you should plan for replacing the fan. You've only postponed the inevitable and it'd be much better to replace it BEFORE it ceases to work. If you wait till it stops you might just end up with a fried processor.

i will suggest u not to take replacing decision at an instant try removing dirt first sometimes a rubber band or thread get stucked to its moving shaft just c that u dont have any in wanted material with ur fan

The key word here is inevitalble....you have a problem that's not going away, and catweazle is absolutely right....it could wind up costing you a lot more than the cheap price of a fan.

I argee also, I had a machine come into my shop for a tune up. I pulled the cover to make sure all the fans were spinning, and what-do-you-know the CPU fan wasn't spinning. I shut the machine off and cleaned the fan. I pluged it back in and it started working but I changed it anyways because it had the option to totally fail. I got a whole new Heatsink and Fan for 12$ from PCW. It was a decient fan to. Just my two cents.