I have an application that I am just migrating to Azure. Currently I use web.config transformation to manage changing the database connecting string dev/staging/prod environ
We have a number of environments (local dev inside dev fabric, local dev outside dev fabric, testing, release which has 2 versions: release/prod and release/staging and 20 projects some of which need some variability in configure settings. We solved this problem by creating a tiny "config" project, included subfolders there that match the environments. We copy files from the subfolder depending on which build we're doing into root folder of the config project, during every compile.
All other projects link to the config project for .config files. We also use partial config files to keep the insanity of repeating the same info all the time across various environments.
Hope this helps