Regardless of whether you are talking top box (bag) or panniers (and I don't know which you are asking about) the answer can be summarized to an extent by simply stating that hard boxes generally provide better security. Soft luggage is generally easier to pack. These days both can be equally waterproof.
As for panniers. As noted, hard panniers offer better security, however when riding aggressive off road trails, they can prove a hazard to your legs unless you are a very confident rider and never allow you leg to get sucked in under the box when riding. Soft panniers are more forgiving in this regard.
There are many strongly held opinions as to what is "optimum." I've tried several setups. However, I'm going to say for true luggage hauling the "optimum" setup is the Happy Trails top rack and pannier racks. Specifically the more heavy duty SU ones. Coupled with the aluminum Teton panniers or the Mojave soft bags you have quite a setup. Add the Large or small (or both...you can stack them) Mojave top bag you can carry a full on expedition load. Or you can use one of the variety of aluminum top boxes Happy Trails sells. I happen to have both Mojave bags and aluminum panniers. Not as extravagant as you might imagine, I originally had the aluminum Tetons on my Scrambler and Mojave bags on the TW, however, due to the unique mounting design they can both be interchanged between bikes.
Obviously I've interpreted "luggage" in a big way here, as in full on remote touring and camping. That may not have been what you meant. Also, the Happy Trails racks and panniers/top boxes or bags, are not cheap. You will spend, for instance around a grand for the SU pannier racks and a set of aluminum Teton boxes. Add $140 for the companion top rack. Then you have top bag/box options that will run anywhere from $140 on up. In addition you can add very nice utility bags made to fit the top of the hard panniers to the tune of $122 a pair.
Finally, if you use the aluminum panniers they are strong enough to mount fuel/water racks such as the Zega Pro models offered from Touratech. (I personally have one pannier rigged with the mount for the 3 liter plastic bottle, and the other rigged with the mount for twin MSR bottles.
Extra finally, my Happy Trail top rack has a plate to mount a 2 gallon Roto Pax to it, and of course the soft Mojave bag will mount above that.
So, if you really meant "luggage" rather than "hauling a few small items" there you have it. A luggage setup to travel the whole Country with...or the world for that matter.