I don't know about those temperatures being
fine
How hot is it in your room? Is it, say, 75F? That's about what it stays in my room, but I have 2 small fans blowing directly on me almost all the time (for my comfort). My case temps, as a result, are around 90F, and the CPU temps NEVER get above 114F (46C), at full load. See below for cooling setup.
So if you keep your room at 65F, then 118F is a definite sign of something not being properly cooled. However, if you run it like me, then 118F is somewhat normal.
Personally, I run a ThermalTake Volcano 9. It's not the greatest in the world, but it keeps my processor within proper Temp. ranges, and plus it was free when I got it

I have 3 case fans and a VGA fan as well, and the motherboard chipset has a heatsink on it. I can play a DVD on my computer without being annoyed by a loud computer in the background, as I designed the system to be quiet when I want it to be (i.e. I turn the fans down). Even then, the CPU temperatures still do not go above 114F.
warning, the following info is not for the faint of heart or for the non-enthusiast...it's not mine nor TechIMO's fault if your brain overloads, causing damage...
I should also note that if your processor ever gets above 55C (131F), a simple Microelectronic Devices course will tell you that the intrinsic carrier concentration (ni) for Silicon will change by a degree of at least 10 (as compared to the value at 300K or 27C, which some professionals agree is a significant change), which decreases charge carrier mobility, increasing resistivity. Hence said, running at 50-55C (122-131F) will decrease performance.
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Lot of people have a weird misconception, but a system at 90' ain't gonna run faster than the same system at 115'.
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This is generally true, as most people will not notice a difference until the processor has been running at high Temps for a given amount of time. If you leave your temps like they are for, say, the next 6 months,
then you, and any benchmark utilities, will notice a difference. Why? Because carrier mobility isn't the only thing that can be correllated with Temperature...the breakdown region of a MOSFET transistor can be as well. Hence, a higher temperature, over time, will increase the breakdown-region of those transistors.
This could be considered insignificant or negligible until you take into account that there are 10's of millions of transistors in a CPU!
Bottom line: If you want to keep your processor happy & healthy for the next year or two, keep it nice and cool.