Almost all street parking is metered in Sydney (at least in the areas you are likely to visit) and run from $3 to $8 per hour -- lots of coins though many meters now take credit cards. Parking is fairly strictly enforced (and residents have annual permits that give free parking). Tolls can be avoided except for the Harbour Bridge, and can be easily paid for on the website (you have 48 hours to pay; otherwise the rental car company will pay and bill you for the toll and a $60 service charge).

As for how enjoyable it is, I think for 5 people probably better with a car than with train/bus or taxi, as you can keep your stuff in the car. Getting a GPS is probably wise, the streets are a bit difficult in Sydney esp. if you are trying to avoid the toll roads. Bondi Beach is easy to reach by car, has plenty of (paid) parking and offers a great RSL at the end of the beach with very cheap food and incredible views. One of the best experiences around.