Few years ago I started commuting with a cheap hydration backpack, and loved it. Cheap, very convenient, I could fit everything I needed into it. It had a dark side though - my back would get sweaty in no time when carrying it.

When the bladder in my backpack developed a leak, I decided to look for alternatives. Since I already had rear rack, I bought pannier bag. It was largish, and I used only one. Bike handled OK with asymetrical load, and since I had the bag on the traffic side, I thought that cars were giving me a bit more space when passing.

I was somewhat concerned about weight distribution - I rode in a very upright position, with handlebars higher than saddle, hence most of the weight was on the rear wheel. I decided to try front panniers; I got rack and bags from Nashbar (I think) and never looked back. The bags are not as convenient to carry off the bike as a backpack, and I had to go back to using water bottle (sigh), but for me it was definitely worth it. My back can breath, bike handles better because of lower center of gravity (it's more stable, without losing much agility), I can wear reflective vest (I used to drape it over the backpack), I can easily access my jersey's rear pockets...

That's my story. Perhaps investing in a better backpack would help with sweaty back, but I don't hike after riding...

Others may know more though.