Here is an alternative to panniers (the last pictures, by scrolling down and then selecting the last page, show the idea clearly. Jardine's site has a number of other ideas that would help in reducing the weight and cost of a touring bike setup. And his philosophy of building things yourself rather than going with ready-made is also good):

http://www.rayjardine.com/adventures...rica/index.htm

This setup worked well for them while riding across the country twice with it.