Saddlebags are really the best way to go in my opinion. There are a lot of different types to choose from too. I like them for carrying tools and stuff like that. I've seen luggage racks and they have some advantages, but I have never used them. You might be able to carry quite a bit on a luggage rack. I've thought about giving a rack a try for longer trips.
I recently came back from a year in the Republic of Korea (South Korea), and the guys there installed luggage racks on their bikes. They would use their bikes as delivery vehicles. You wouldn't believe the stacks of boxes they would have on the back of their bikes. I thought for sure that I'd see a fridge on the back of a bike one day.
And the whole time they would weave through traffic. They were amazing riders. Fearless.[&:]