The basic idea is to make a bag shape out of both fabrics then slot one inside the other and join them around the opening. This means there are no rough seams on the inside. It also means you don't have to sew through more than two layers of fabric which is important if your fabric is thick and your sewing machine less than industrial.
The design was inspired by this site. We liked the design and there were heaps of helpful pics through some of the links on that page.
We actually made this in two steps. We completed the bag in one sitting without too much thought of the strap system. We then shopped around for strap hardware and designed the strap system afterwards. It worked out ok but if you are going to do something different with the straps think hard about how it will work before sewing anything.
Step 1: Gather materials
fabric for outer - we used wool felt ~1yd
fabric for inner - we used black vinyl ~1yd
velcro ~1/2 yd is enough
bias tape - for making a neat edge - I got wide double fold from JoAnn
some nylon webbing
some reflective tape (optional)
We got all of the above from a local discount fabric store here
Materials for strap system:
2in nylon webbing
1in nylon webbing
2in cam belt clip
1in side release clip
2 2in plastic swivel hooks
We got these from REI and a local outdoor fabric store.