I use dry bags that basically act as compression sacks. My primary interest, though, is keeping my critical insulation (sleeping bag, spare socks, insulating clothing) dry at all times, especially should I again fall into a creek! The Sea-to-Summit Ultra Sil bags that I bought almost 2 years ago work just fine, although earlier models had serious leakage problems. I'd never trust any dry bag without testing it first, though!

I gave up using a pack liner because I kept fighting with the thing--I'd push an item down into my pack and it would pop right back out at me!

Your Mileage, of course, May Vary. Some prefer a bigger pack so that less compression is required. I prefer the smaller pack.

Just be careful with the insulation for puffy stuff (either down or synthetic)--over-compressing it for extended periods can damage the loft. My sleeping bag is the first item out after my tent is pitched and the last item packed before the tent comes down. If it's a many hours' or days' drive to the trailhead, it travels in its big storage bag. I don't pack it until the trailhead, and I unpack the sleeping bag as soon as I get back to the car.

EDIT: Also, compressing something into brick-like status makes it harder to fit into the pack. Better to have it a bit bigger and have it "give" a bit so as to conform to the space in the pack. That's Colin's advice, too!