I tour with panniers. I have toured with guys who use BOB trailers. I think it's probably a wash.

Panniers and racks weigh less and cause less rolling resistance than a trailer. Panniers probably have a more noticable effect on handling. I like being able to divide my gear up among four bags: one for clothes, one for kitchen, one for tools, etc. A BOB trailer can be attached to pretty much any frame. Racks work best with a frame that has the necessary braze-ons. the BOB probably carries more stuff, but that just means you carry more stuff. The BOB trailer works like a kickstand to keep your bike standing while parked.

If you are touring on a dedicated touring bike, I'd say go with panniers and racks. If you are touring on a roadster or a mountain bike, you are probably just as well served with a trailer.