Best? Doesn't seem like there's any one right answer.
Pros for carrying on bike:
Weight is on the bike, not you Doesn't make your back all sweaty
No adjustments necessary Generally easier to clean Easier to choose alternate beverage options (with the right bottle) Easier to just always have a water bottle on the bike (one less thing to worry about remembering to bring) Pros for carrying in a hydration pack: Easier to drink from (so you drink more often in little sips) Can drink without waiting for smooth riding (don't necessarily need to remove a hand from the handlebars)
Less likely to pick up dirt (cleaner; but see comment about flip-top for bottles) Seems like the kind of cycling you're doing makes a big difference.
Mountain biking has more dirt and more rough terrain where your water bottle nozzle could pick up trail dirt and be hard to reach down and grab to drink from.
Road biking tends to have plenty of smooth pavement allowing for drinking from a bottle and not as much dirt to worry about.
I mostly ride on the road and generally use a water bottle (or two or three; or a water bottle and a coffee travel mug), but if I'm going for a long ride (especially in hot weather), I'll use the hydration pack (and probably have a bottle in all 3 cages, maybe with juice or something like that in one) just to be sure I keep well-hydrated.
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The core of this question seems to be the following:
Where do you keep your water to optimize speed/agility/enjoyment?
Disclaimer: I've never had a Camelbak, but I do drink water!
Speed : If you mean speed of access, keeping water in a bladder is obviously the winner.
If you're concerned with aerodynamics, I'd think the answer is a toss-up.
Agility :
Water higher up on your back will make the bike a little more top-heavy.
I know that carrying a half-gallon of milk in a backpack throws me off, particularly on a road bike.
Enjoyment
: It depends what you mean by enjoyment.
For a short ride, having something on my back isn't a big deal, unless the day is very hot indeed.
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Judging by the price, this water bottle holder must be the best option.
bicycles.stackexchange.com/users/163/Kibbee
I prefer it on my back in a hydration bladder, that way, it is easily accessible and out of my way.
Regardless of the type of biking I am doing...
bicycles.stackexchange.com/users/94/studiohack
For MTB The camelbak is very nice, since it is cleaner, and easier to drink.
But I prefer to fill it with only water because it is harder to clean.
So I take a bottle with sportdrink to get some sugar on longer trips.
For the road Bottles are good, but on longer trips I like to have some extra water with me.
So I also take my Camelbak with me.
Conclusion
On longer trips (3 hours or more) I take bottles of sportdrink and a Camelbak with water, both on my MTB and on my road bike.
bicycles.stackexchange.com/users/444/GvS
I have a Camelbak Razor which I do use for road cycling.
However, I am selective about when I use it.
In general, it does not have detrimental effects on agility, but no doubt somewhat on aerodynamics.
For rides less than 4 hours, I go with water bottles in the bottle cages.
For longer rides, especially in remote areas where I won't have easy access for refilling water bottles, I've found the Razor to be quite useful.
If riding in generally "civilized" areas, I tend to just go with the water bottles.
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I decided on a compromise I was looking for water after the ride that wasn't warm and had a powder or energy thing in it to replenish
so I put a bottle in the camelpak so it was kept cold by the condensating ice and the energy supplements in another pocket
bicycles.stackexchange.com/users/26611/Jeremy
Where do you prefer to carry your water?  I find when I am mountain biking I prefer to carry my water in a hydration pack on my back (easier to rock the bike).  When road biking on flat ground I prefer to have it on the bike.    Where do you keep your water to optimize speed/agility/enjoyment?   Edit: It seems to me that road bikers never use camelbacks.  Is there a reason for this?
Where is the best place to carry water (back or bike)?
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<mountain-bike><hydration>
bicycles.stackexchange.com/questions/397
bicycles.stackexchange.com/users/134/sixtyfootersdude
Most riders seem to prefer carrying water on their back, in a bladder or Camelbak as this creates less drag and is easier to access. However, these should be carried low on the back to prevent the bike becoming top heavy. You can adopt different strategies depending on the duration of your trip. For short rides, water bottles in cages suffice, for longer routes you could consider a hydration pack. Moreover, if you want to save on weight, you could discard your empty bottles. You can also try keeping your water bottles on your back if you want to access them easily, even though that might increase your upper body weight. Camelbak is a clean and easy alternative, especially for mountain biking.
You can adopt different strategies depending on the duration of your trip. For short rides, water bottles in cages suffice, for longer routes you could consider a hydration pack. If you want to save on weight, you could discard your empty bottles. You can try keeping your water bottles on your back if you want to access them easily, even though that might increase your upper body weight.  Camelbak is a clean and easy alternative, especially for mountain biking.