I use both. Water in the hydration pack and Cytomax cocktail in the bottle. Hydration bladders are extremely hard to keep gunk free (store the hose in the freezer between rides).

I use a nalgene bottle with a cover on my bike that has the bottle cage so conveniently located under the down tube or if the frame allows it (said bottle is available at REI and a very, very few LBS). My xsmall Titus frame only takes a small old-fashioned bottle so that's what I use on it. I just inspect it before using or wipe it off with my "clean" glove.