Each option has their own characteristics. Just depends which one you like. Well, everyone pretty much agrees backpacks suck...so...

Saddle bags bring the weight more to the cetner of the bike. However the weight is higher, which some riders don't like because it makes the bike feel tippy.

Panniers keep the center of gravity lower, but the weight is more biased to the rear. Wich can make it feel like you're dragging an elephant sometimes.

It's a matter of preferrence. That being said. I use a Carradice saddle bag.