I bought some Axiom Seymour Panniers for $40 (+shipping). First set of panniers I've ever owned but they work great and seem to be made of decent material, and they have good reviews.
http://www.totalbike.com/reviews/B00.../PanniersBags/
http://www.viewpoints.com/Axiom-Seym...s-review-d46f6
This probably sums them up:
I would imagine that there are other more rugged and truely water-proof bags out there that would out perform these bags, but they are likely to cost 3-5 times more. These are an excellent, budget-friendly set of bags that more than do the job.