I use a bag because I am generally only carrying a few sandwiches at a time. I also like being able to keep all of my personal effects on me as I leave my bike (generally deliver to large office/campus buildings and I don't like the idea of having things left outside with my bike). I tried a rear rack and milk crate but didn't really like it, though a front basket may be more practical.

Those Seagull bags look pretty nice, I may give one of them a shot.