I've been searching for an army knapsack/haversack for a looong time, and the ones I find in surplus shops cost absurd amts of money. So I figured I'd buy canvas and make one.
Problem: I lost the fabric :P.
One say when I was visiting the thrift store, I found an old army laundry bag, olive drab with a few holes. It was only 2 bucks so even if I never used it, I figured it wouldn't be much of a loss. Problem 2: Too damn big to carry anywhere. So I figured I'd turn it into a usable backpack.

Step 1: Measuring.

After getting all your material and supplies mentioned in the intro, take your measuring stick/tape measure and count:
-7 inches from the top of the bag and;
-12 inches from the top of the bag
Do this all around the entire bag.

Step 2: Cutting!(Not You Emo Kid!)(No for Real, Emo Kids Are Cool)(Sometimes).

After you mark all around the bag (dotted line with sharpie works good), begin to cut. Don't try to cut with one pass, you WILL screw up. Instead make a small incision on the side, then cut around in a circle.
Start with the 7" line (or the 12", It really doesn't matter) and cut across, and follow up with the other. Set them both aside.

Step 3: Ok.

No you have 3 pieces(if you didn't screw up, that is): Main Bag, Middle Piece and top array.
Set the middle piece aside (you'll use it later).
Take the top array (the part with the hook and loop thingies) and slip it over the main bag top. make sure the metal spring loaded part is facing the table, and the pack straps are facing up. Line the cut edges up and make sure they are even. Pin it together every few inches.
Now you are ready to sew!

Step 4: Hope You Paid Attention in Home Ec...

Using heavy duty/upholstery thread (choose a color), sew the edge. You should go back and do the overhang for added durability.

Step 5: Remember That Seemingly Usless Piece of Middle?

Well if you ignored my instructions and threw it out, go dig it out of the trash! Idiot.
If your bag has holes like mine did (and it probably does, since it came from the thrift store or a soldier willing to sell), then you need patches. You can get as many of those as you want from that piece.