I love my paniers... I have a set of small 21 litre paniers and a set of 45 litre paniers that can be used together on my double racked bikes.
I have a nice backpack with a hydration pack but I only use that on my mtb or on cooler days as it just gets too hot.
I have been using the 21 litre paniers a lot as they are just the right size for my day to day commute, aren't too large, and discourage me from packing the kitchen sink when I go out.
They also fit my folder better than the larger bags...