There really is no comparison between Sydney and Melbourne at all. Sydney wins.
The harbour is simply magical when the big bursts of all encompassing color go up and show off the surrounding city, hill suburbs and thousands of spectator boats. We used to live with a superb Sydney harbour view and barely looked up when fireworks went off they were so frequent. Now I couldn't think of a better place to fly into and celebrate the night.
Expedia might not be the best place to check rooms either. Hotels keep back capacity and juggle room avaiability but demand has been softish the last couple of years.
Also, room rates peak for harbor views, naturally. However stay at Double Bay, or Bondi, go into the city for the night and it would be a manageable cost plus pleasant Sydney experince.
A couple of sites that offer comprehensive listing on accomodation are
www.wotif.com and
www.accomline.com. Both are consolidators sites but will give a feel for what's around and where.
You'd miss out on something great if you weren't in Sydney for the night; just the whole atmosphere of the city as it gears up is something to behold, and now, as well there a festival of music et al to complement the music.
[This message has been edited by Constant Motion (edited 03-18-2003).]