Now that I've been running this a couple of days, I think the 38 degrees is fine. I'm putting it in a cup right over ice and I don't think the 38 is making me lose any carbonation.
In fact, the carbonation seems a little too much. I just lowered the CO2 pressure from 100 to 90. I might even go lower. The McCann carbonator instructions say that 100 psi is normal and to reduce to 80 to 90 psi if you have too much foam. However, those instructions are assuming that you are mixing in a percentage of syrup which I'm not doing. I may need to go lower even lower than 80 psi. With straight soda water, foaming isn't an issue at all.
Thanks for your help.
Did you see my build thread?