Earlier this year I switched from my old Camelbak to the new Osprey Hydraulics. It packs nicely in my backpack (REI Lookout 40) and does bulge awkwardly like a Camelbak. I think it's a great pack. The lay-flat design is very comfortable and saves space in my backpack.
Here's the review post if you'd like a little more detail.
Osprey Hydraulics 3-Liter Reservoir Hydration Pack
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