The Quay is VERY nice. My wife and I had dinner there in April '99 during the big hailstorm and it was incredible (both food and views). The Park Hyatt's restaurant is also good, and its a great hotel. Bel Mondo is also very, very good, and Rockpool. Tetsuya's is supposed to be wonderful, but I haven't been able to get reservations there on my trips down under.
Sailor's Thai is quite nice, and a bit less formal than the others.
The only restaurant I've been disappointed by in Sydney was 42, in the Chifley Tower. The food was good, but the service was phenomenally bad. Maybe we just caught them on an off night, but I would never pay for another meal there.

Bob