My sister stayed in a suite at the Grand Mercure overlooking Sydney Harbour for A$300/night and loved it. She was there one month ago. My husband and I stayed at the Sydney Hilton two years ago, and we loved it because of its great downtown location and because we are Gold HHonors members and were upgraded to a suite. We were only paying US$110/night, and the room was going for over $1,000. We had a view of three sides of the city including the AMP tower. I wish I could score two business class upgrades on Qantas for MEl - LAX for next MArch. I'm not looking forward to cattle class.
One thing to keep in mind is that there is a holiday surcharge on take away and eat in meals on Christmas Day and Boxing Day.