Racks and panniers are to some extent a 'you get what you pay' for type of deal, but some good, cheap solutions exist. Be aware that if you get panniers, many of them will have a hook or bungee near the bottom of the bag that needs to attach to the rack, so you will need a rack with a horizontal bottom bar. If you ride a bike with short chainstays, may also need to make sure you get a rack that will sit far enough back that you don't get heel strike. For cheap, Wald folding baskets on a cheaper aluminum rack are hard to beat. My girlfriend has them and they are super cool. I use an Arkel bug and it's definitely worth the much heavier price to me, but it just happens to be really good for what I use my bike for. In the middle, I have tried Axiom waterproof panniers, and they are also excellent and function very well, they just aren't quite as fancy or bulletproof as more expensive brands like Ortlieb and Arkel.
Some people also opt for a more DIY, less elegant solution and attach a couple of milk crates to their rack.
Search around the forums and you will find all kinds of stuff about the brands listed above.