Yes, what you are hearing is conducted noise in the mask and hoses. The short hose connecting nasal pillows to the larger hose tends to magnify the sound.
A few things help:
Covering both hoses with hose cozies.
Make sure that your hoses and mask are not resting on the pillow or mattress--both magnify the sound. The best bet is to hang them from the headboard or use a hose hanger.
Earplugs generally DON'T help because they will intensify the sound conducted in the bones of your head. White noise (a fan, sound machine, or mp3 player) will mask the sound considerably.
Over time you will get used to it. I can hear it at night when I lay down but often cannot hear it in the morning--I think my brain shuts off that hyper awareness as the night progresses.
Phillips Respironics System One Auto A-flex and Humidifier
Encore Viewer 2.0 Software