SSIS Connection Manager to SQL Server with Passwords Best Practice

So I have Googled and Searched and Googled and Searched and Googled again...No where can I find the "Best Practice" for defining Connection Manager to SQL Server and Passwords both on the Connection Manager and the Package Security and the Project Security and anything else I may be forgetting.

I guess one could make the argument that the only people that would and will have access to the SSIS Package, thus the security of passwords, are the Business Intelligence Development staff.

So based on that assumption that no environment is truly the Wild Wild West, yet I'm sure there are some...especially in small shops, what is the Best Practice for defining a Connection Manager to SQL Server?

1. Package Security ProtectionLevel Property?
2. Project Security ProtectionLevel?
3. Connection Manager to SQL Server, actually SQL Azure? XML Provided Password? Connection Manager Properties and Expression and providing the ServerName and Password there via variables? (That's what we do now to keep it simple)

Thanks for your review and am hopeful for a reply.