I use my MSR dromedary bag. Just one more reason I love it. Plus in the middle of the night, I can drink by turning my head and 'kissing' the dribble spout. PERFECT.

I'm going to sew a fleece/flannel cover for it, but that's just to make it a bit softer.

I used to use an empty water bladder wrapped in a tshirt, like a camelbak or similar when I was in the army, worked great in hot weather, in cold weather not so much. Of course it also means needing to have access to water to refill it in the morning.
I totally agree that a good pillow is a luxury well worth it.