My Mother used a wet-pail when she was cloth diapering us, but I use a dry pail.

Wet Pail- One of the things that is essential in a wet pail is the ability to SEAL.  If the pail doesn’t have a tight lid, it may tip over or a baby may invade it, headfirst, and drown.  So like every other thing in your house that is filled with water, make sure your wet pail Seals!  (A five gallon bucket with a lid works pretty well as do those cat-litter pails with lids).
A wet pail is filled about ¼ way with a cleaning solution.  Most people use vinegar, borax, or baking soda/washing soda.  But there are some things you can use such as tea-tree oil or Bac-Out Enzyme Stain Remover.  DON’T USE STRAIGHT BLEACH!!!!! My mother had a friend that made this mistake and her diapers disintegrated in her hand when she went to wash them…. Bleach is your friend in SMALL amounts, but don’t overdo it.

When using a wet-pail, you basically dump the fecal matter into the toilet and toss it into the wet pail (swishing around a couple times if you like) and let it sit there until you decide to wash.  When wash-time comes around, you dump the whole pail (water and all) into the washing machine and proceed with washing.

Dry Pail- A dry pail is much easier to use if you ask me.  A dry pail doesn’t need to seal (though  if you go longer than just a couple of days between washings, I’d advise it) and can be any type of garbage can you find.  Most people tend to use one of the flip-top kitchen pails.
When using one of these, simply dump the stuff in the toilet, and toss into the dry pail.  When wash-day comes, dump all contents into the washer and proceed. (you may want to open up the diapers before dumping though, or wash them inside out)

Why I use Dry Pail- Sometimes when you use a wet-pail the water can breed bacteria (especially if the child has been sick or has just gotten immunizations).  While the dry pail can also do this, the wet pail’s use of water makes a better environment for bacteria and viruses to grow.  Plus, I’ve found that keeping your diapers in water makes them wear out a little quicker.