well, coming from england, i would advise people coming here to pack;
rainjacket-you can guarantee it’ll rain at some point
a warm jumper-you can guarantee it’ll be cold at some point
money-to buy more jumpers and rainjacket, cos it WILL be cold and it WILL rain at some point!!!
other than that a couple of clean pairs of socks and grundies(underpants to the uninitiated) and you’ll be fine.
I went through northern Europe in 2001 with the missus, and we both had the earlier version of this travelpack.
I had the normal stuff in there-- a pair of pants, shorts, Tevas, several shirts, toiletries, a fleece, gore-tex jacket, camera, woolite, etc…
But I also carried some oddities-- my shoe polish kit (unlike Matt I like my Docs-- they go everywhere from the Alps to the dance floor 
and for a week I was carrying around a painting given to me by a relative.
The key is planning your wardrobe so that everything matches and taking along enough underwear and socks so that you only have to do laundry every four or five days. If you’re staying with friends or relatives, you can easily wash your clothes and leave the pack behind for the day too.
The first time you have to run for a train lugging everything, you’ll be glad you’re traveling light! And you don’t have to worry about cobblestone streets either.
The idea is to carry around anything worth stealing (like your camera, walkman) in your daypack, so your main pack back at the hostel has nothing but smelly laundry and toothpaste. But -really- important things (passport, insurance info, ATM card, cash) should be in your money belt in case you misplace your daypack.
If you REALLY want to be safe with something, there is usually a safebox the receptionist has access to, and typically the desks are manned 24/7. I kept all the valuables that couldnt fit into my moneybelt in my daypack, and just checked the entire daypack in at night when I didnt want to lug it around to a bar.
As for the moneybelt itself, I usually slept with it on under pajamas. 
Quite a few hostels I have been to offer a small chest under the bed, a padlock, and a key. Also, if you look around you can find hostels with smaller rooms with only 2 bunks in each, and rent out the entire room. You will have your own key to the room, so this adds a bit of extra security, but things can STILL get stolen. The entire point is to not leave valuables alone to begin with.
My mom just finished doing the Camino de Santiago, where as you can imagine weight is at an absolute premium. Her pack had a dry weight of 8 kilograms. She took a total of 2 outfits. They were some kind of ultra-gonzo-durable hiking stuff. She alternated them strictly and washed the unworn one every night.
When I go back to Spain I expect to be one jump up from backpacking. I think, in retrospect from the last time*, I’ll be doing regular maildrops home of whatever I don’t feel like carrying anymore.
*Carrying a big suitcase, a backpack, a tote bag, an overstuffed purse, and a cardboard box on an extremely overcrowded Barcelona commuter train at 8 AM after dancing until 5 the night before? Not my best plan.
This I would disagree with. Always pack more socks than you think you’ll need. If you fall into a river, or get caught by a surprise drenchpour, you can handle wet clothes, but fresh dry socks to put on will be a godsend. Oh, and make sure that the socks at least, and possibly a full change of clothes, are packed in ziplocks, for this same reason.
And your first aid kit should include moleskin (a thick felt-like material). Even if you don’t, it’s almost a guarantee that someone in your group will get blisters. When this happens, you use the moleskin to make a donut bandage which fits over/around the blister to keep pressure off of it.
When my mom went on a hiking trip to Wyoming a few years back, I made her a list of what to pack. Some of the requirements would be different for hiking in civilization vs. wilderness, of course, but it’s a good start:
Someday I will do Europe with just a credit card. That would be very relaxed.
My packing list:
4-5 shirts
3 pairs jeans or dark-colored pants
A week’s worth of socks and underwear
Nightgown
Swimsuit
One pair sneakers
One pair tolerably decent-looking sandals that can double as going-out shoes
Towel
Guidebook / paperback novel / journal
Small travel alarm clock
Rain jacket or umbrella
Shampoo / toothbrush / toothpaste / deodorant / Dr. Bronner’s
Camera
Sunscreen
Lightweight blanket (for cold nights and nighttime train and ferry rides)
That’s about it, really. You’ll be surprised by how much stuff you don’t really need.
There’s different degrees of backpacking! My interpretation was that the OP was talking about the traveling tourism experience - trains and buses, towns and cities. I carried a Trangia stove and tent when Interrailing around Europe, and never so much as unpacked the stove. I did use the tent though, in fact I shared it with the Canadian girl with the bongo drum.
But your point is well made, and I will probably take your advice when I go to Peru this September.
I read a biographical book about hiking the Alps (can’t remember title or author I’m afraid) where some character hiked with three socks, total, washing and drying one in rotation. This was to save weight. Yuck!
For my 6-week trip in 2000, I had a backpack not much larger than a standard school backpack, and I had
thin track pants
cargo pants, khaki type material
1 short silk skirt that packed really small and always looked good
2 tank tops
2 short-sleeved tops
2 long-sleeved tops (one was thermal but still thin)
1 sarong
1 pair shorts
running shoes
sandals that had good tread on them and were ok for walking or dancing
flip flops for showers, beach, etc.
bathing suit
3 bras (wash, wear, spare)
7 pairs underwear
5 pairs socks
1 rainjacket that folded down really small
1 ancient hooded zipup sweatshirt, very thin
small amounts of laundry soap
old thin smallish towel that dried faster than one of those fancy packtowels and never stank
some ziplock baggies
travel-size febreeze
travel-size toiletries & first aid kit (bandaids, painkillers, moleskin, aloe vera gel)
sunscreen & chapstick (forgot them both and had to buy there, which was fine)
journal, film, camera, small shoulder bag for day travel
bottle for water (got replaced over the trip)
swiss army knife (with corkscrew!)
moneybelt with credit card, passport, plane tix, eurailpass
I still had plenty of room for souveniers and ended up throwing out some underwear and buying some new over the course of my trip. The year I went, it rained everywhere for about 2 weeks, so I was glad I had the rain shell and the layers of clothing (it was really hot everywhere at first and I was regretting bringing the warmer stuff, but then it started raining). I think my backpack only ended up weighing about 20 or 25 pounds, depending on if I was wearing the warmer stuff and running shoes or if they were packed. I washed out my underwear and bra and sometimes my shirts and socks every night and ended up doing all my laundry about 3 times during the trip.
Some of the youth hostels require a sleeping bag. I saw some wise travelers with home made bage, basically a cotton queen sized sheet folded over and sewed together. But there are some nice lightweight fleece bags available too.
And of course, the backpacker’s bible is a must.