okay, I'll be devil's advocate here since a lot of people seem to be voting for panniers. (I do use panniers, but only when I am hauling a lot of crap) I use a Wingnut hydration-pack, ya know like Camelbaks...and I love it. It really helps me prioritize what I need to lug around all day. My daily loads are now much lighter than they were when I was using the backpack and an Ortlieb. I pretty much only carry things I know I need. There is so much unnecessary space in panniers that they kind of end up turning into a black hole, dragging you down with the gravity of the universe and a mess of things you don't realize are inside. Anyways, the point is that hydration-packs like Wingnut and Camelbak are very functional for bicyclists. And then there is the bonus of having water at your fingertips on longer commuters instead of stopping to get a water bottle. Panniers are just overkill for most of what you usually want to carry.

btw, my adventure pack from Wingnut has 1600 cubic inches of space and I find that sufficient for most of my needs, plus the features are extremely well-thought out. I really recommend their products.