I agree with the improved comfort of panniers- I have a fairly easy 4 mile (one way) commute, and used a back pack all last year. The weight didn't bother me so much, but the sweaty back syndrome got old quick-
I purchased a blackburn trail rack from my local LBS http://www.nashbar.com/profile.cfm?c...cat%3A%20Racks
I'm not sure of total weight limit, but I carry between 20-40 punds regularly and haven't had a problem. I also have Jandd panniers that fold up to stay out of the way when I don't need them and cthey ome off easily for my non commute rides,
http://www.jandd.com/detail.asp?PRODUCT_ID=FGBP
and now I commute almost every day- rather than making the excuses for why I HAD to drive to work last year...I do hit my heels if I don't push the panniers all the way back on the bike (size 9/42 shoe), but it's not a problem as I just graze them- not knock them off.

I find the ride WAY more enjoyable with the rack and panniers, but for an economical approach, the cost of a back pack is going to be much less- overall. If you start off with a pack, and then add the rack and panniers later (like I did) you can fit the pack into one of the panniers and have a more comfortable ride sometime in the future