http://www.olegsych.com/2010/12/config-file-transformation/

Quite elegant solution except you have to create additional files manually.

Also the last section should be like this (to avoid double names of the app.config):

<ItemGroup>
  <None Include="App.Debug.config">
    <DependentUpon>App.config</DependentUpon>
  </None>
  <None Include="App.Release.config">
    <DependentUpon>App.config</DependentUpon>
  </None>
</ItemGroup>