I used to shun backpacks for bicycling but for my current commute I find it's the easiest way to go.
It's a generic Jansport, just big enough for my work clothes, shoes and business stuff...phone, PDA, pencils.
I'd recommend looking for a bag big enough for your purposes that has a belly belt and chest strap. They really help to keep the bag in place while cycling.
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Fewer Cars, more handlebars!