Let me just get this off my chest: I am beyond understanding how anyone can walk out of the house without their wallet or their keys. This would, to me, be tantamount to walking outside without pants on.
However, these two items are not much use when travelling, so it might be best to find a safe place for them somewhere in your luggage. Your money, passport, plane tickets, should all go into a pouch underneath your belt or under your shirt (I prefer the latter). Some money you should keep in your luggage (in case you are robbed), along with a back-up credit card. Your wallet is better kept in the front pocket to avoid pickpockets.
Now I use a cigarette case for my wallet. It will fit in the front pocket of a pair of jeans, and the size forces me to be frugal with what I keep in it.
The carry-on the traveller's quintessential piece of luggage, and fulfills several tenets of the traveller's ethic. First, it can always be carried on the plane. Second, it forces the traveller to be careful about overpacking. Third, it frees the traveller for spontaneous changes of plans, because the bag is always with you and shouldn't be too heavy to carry. Fourth, it allows for little adventures, like getting into town way too late and the only available hotel is across town and the public transportation has stopped for the night (the Last Metro syndrome).
My carry-on is a black suitcase-shaped bag that has hidden backpack straps and hipbelt, and it is by far the best bag I've ever used. I travelled through Europe with an internal-frame backpack, which was nice to carry but had compartments not suited for packing traveller's things. I think the carry-on is just as good in backpack mode: it carries less, so it weighs less, offsetting the advantages of the high-tech backpack frame.
For maximum carrying capacity, one really needs a duffle bag. However, they are unwieldy, and violate all the tenets expressed above. I would use one over traditional luggage, though, if necessary, because it holds lots of stuff, conforms well to odd-shaped contents, stuffs into odd-shaped luggage racks, and doesn't take much space when empty.
One of the most essential tools in all of existence. I never go anywhere without mine. However, the traveller's ethic does come into play here. Less is more with these knives, because they quickly graduate from pocket knives to large sidearms. So bare minimum of features; I usually draw the line at the scissors (including them). That means knife, screwdriver/bottle-opener, small knife or file, can-opener, corkscrew, and awl, and these are the essentials.
However, since the terrorist attacks of September 11, no knives are allowed in carry-on baggage. That means either checking bags, or leaving the knife at home. Last trip to Paris I left the knife at home rather than check a bag. Travelling involves lots of trade-offs and hard decisions.