I'd try to be very close to Circular Quay, including the Rocks. If you have elite status or collect points in some chain, there are options such as Westin, Sheraton on the Park, IC, PH, FourPoints, etc. [I don't like the old CBD where the Hilton is located.] From here, you can walk to the Rocks, aquarium, botanical gardens, opera house, art museums, and ferries to Manley and the zoo. It's generally a pleasant area and you might get a good view from your room or a lounge. Others may disagree, but I like the Observatory (formerly an Oreient Express hotel) on the far side of the Rocks, but others I know prefer IC, PH, or SOTP.