"Like Glenn, I prefer a water bottle in my side pack pocket."

I attached a molle water bottle holder to my backpack shoulder strap. It's the most convenient place for me.

I wrapped a piece of velcro strap around the backpack shoulder strap two or three times around. I did two such straps, one a little higher than the other. I then hung the molle water bottle holder. It holds a 20oz gatorade bottle although I'm sure larger bottles would work also.