I try to stay away from oils when it comes to magnetic media.
Particularly in floppy drives, where the air pressure inside the case is
often negative with respect to the outside, dust and dirt get sucked in
at an amazing rate.
I use pure silicone lube or a dry moly lube such as Drislide:
http://www.drislide.com/
to keep the dirt accumulation down.
--Chuck