here's the breakdown of my (limited) experience:
faster to refil between laps (just swap them out)
can carry different things in different bottles
harder to drink from on the run (this is mitigated with practice + timing on most courses. unless you have a really crazy, no-time-to-think course)
no place to put extra gear (of course, you can use a seat pack or pockets or the like)
harder to hold on to. it sucks to drop a bottle while speeding down a trail.
capacity. both in fluid and gear.
easier to drink on the run. the tube is lighter than a whole bottle, and since it's strapped to you back, it's very difficult to drop.
if you get the pack fitted right, it *may* provide better weight distribution. YMMV: some people prefer the weight on them, some people prefer it on the bike. both have an effect on ride feel and maneuverability and the like, experimentation may help you figure out which you prefer.
weight (sometimes being able to carry your entire repair kit is a BAD thing)
takes longer to refil, if you even can, and can take longer to get to things in the pack than in your pockets. for example, if your stem comes loose and you have to pull out your multi-tool to tighten it... (yeah, this happened to me once. it sucked.)
it takes experimentation to find the best way to wear the pack, which can affect where the work of carrying it goes. mine used to make my lower back work harder, but i think i've gotten it adjusted to the point where it's fairly neutral.
i think that, overall, a good hydropack can be useful, but not essential. it's really a preference thing. for rides under an hour [and races under ten miles], i leave the pack at home, but for longer rides i find it useful. but that's me. i get passed by plenty of people going just bottles
[and occassionally pass guys who DNF when they blow tires]