How should students approach quals?
Qualifying exams are never to be taken lightly. Even when they prove to be a surreal experience, they need to be given the attention appropriate to their seriousness. These are exams that you typically only have one or at most two chances to pass. As a result, you want to get through them on the first try, so that you don't have to worry about them again. 

How hard you have to work does depend a lot on the structure of the exam, and based on your previous preparation. If there are a lot of subjects to be tested with which you are not familiar, you may have to work harder than if you're getting A's in all of the classes that will be tested on the exam. (Even then, you'll still want to work through some practice problems to get a feel for the kinds of questions that are asked.)

As the original questioner mentions, in many cases the oral exam can be a "sanity check"—in more ways than one. If the decision has been largely made on the basis of the previous coursework and written quals, then the oral exam can act either to confirm the decisions of the panel, or as an effective psychological exam. One of my panels turned things into what amounted to a carnival side-show, with everybody acting completely out of character, and in a manner I found entirely unbefitting an oral qualifying exam. However, it made sense to see if there was any way to make me "snap" and lose my cool. (I was too busy trying to figure out why everybody was acting so oddly to really snap.)