I have used over the years, Courier Bags, Backpacks & panniers for commuting.

My opinion is that a Pannier on the side that the traffic passes you is best. When I first switched I'm sure that the drivers were giving me more room. Also when commuting at night I put a light on the pannier making me appear much wider than I actually am.

As I have a rear LED light on my helmet as well, i'm sure a backpack would obscure the view of it.