Do you work in your server room?
Generally no, although in some companies with only 2-3 servers, yes - my office was the server room.
Is this a common practice?
For small companies and technology startups, yes - space is an issue.
How do you cope?
I make a business case against it, security, cost, etc. If that doesn't work, I bring a sound level meter and the OSHA guidelines, and show them that they are providing an unsafe work environment. This would require them to perform monitoring and sound control, supply affected employees with proper equipment for such a working environment, hold occasional training on sound exposure, etc, etc, etc. The cost would be much greater to support than providing a work area outside the server room.
At what point do you suffer hearing loss?
If you can't hold a conversation at a normal level in the server room (about 60db) then it's likely too loud to work in for 8 hours a day. Extended exposure to high sound levels leads to hearing loss, and the employer would be liable for this if they did not proactively follow the OSHA guidelines.
Of course, by that time you've already lost something valuable, so it's in your best interest to protect yourself by demanding an appropriate working environment.