I use a backpack, but have never had the chance (or bike mounts) to play with panniers. I believe I would use them if I had more things I needed to take to work i.e. laptop etc.
One plus of a backpack is once you are at work, lock the bike up and walk right in w/ your backpack as opposed to having to dismount/mount you panniers everytime. For those with cubicle side parking, not really an issue.
I use to run a Pearl Izumi Velocipak, but I pretty much ripped off the shoulder straps in a bike accident in Sun Valley Idaho. Although I liked the rain cover on this pack, I did not like that it would come loose on windy days and look like a Nascar drag-chute flailing behind me. Also it was a pretty limp pack so it didn't have much support or shape, especially in the back area.
I now have a Dana Designs pack (a hiking version) w/ about 2000ci space. It has a very firm backing that evenly distributes the load all across my back. I use a garbage back for an internal rain liner and I stole the reflective strips off my velocipak and sewed them on. Perfect commuting pack for me.
I guess it boils down to this for me; When a good backpack becomes uncomfortable, on when your gear is too much for a backpack, it's time for panniers.
One mentioned panniers being bumpers, so maybe a backpack could be spinal protection in the event of an accident or collision??
Beave