The only situation that I can see the need for larger bore bikes (950's, 990's, 1200's etc) is for riding double or for mostly road miles. For everything else I think a 650 is going to be immensely better of an off road machine and still capable of terrifying you with speed and acceleration. Suzuki DRZ 400's and Honda XR 650's seem to be some of the best options that I've had a chance to ride for riding a mixture of dirt and road but leaning toward the dirt end of the spectrum.
More toward the road end of things, but still with great dirt capabilities, I have a KLR 650 which has always treated me well and logged quite a few foreign miles in Baja and elsewhere without the slightest hitch. 90% of the bikes on tour that I've seen in Central America were KLR's. They aren't the sexiest, but go with what works.
I have 20mm ammo cans set up as panniers on a Happy Trails rack. The cans work great, I've layed my bike over on them numerous times and they do a great job of protecting the rest of the bike. They're easily lockable, perfect size and long lasting. They are heavy though, over 15lbs each and not too quick to remove. But $10 each is pretty attractive compared to $500 plus for aluminum cans. For ease of removal and weight savings soft luggage would be good explore with keeping lockability and capacity in mind.
If you have Baja in mind, especially trying to ride quite a few dirt miles, you want a light bike, there's a shitload of sand and loose terrain that my KLR loaded down was pretty squirrelly on while my buddie's DRZ flew through no prob. Also you want A LOT of fuel capacity (300+ mile range) unless you want to hassle with a jerry can. But mostly you need to be worried about getting a surfboard down there.