This is always a little subjective. Sydney is such a spectacular city that you cannot discount the position of the hotel. Circular Quay , The Rocks , Darling Harbour , McQuarrie Street to name a few places .... Harbour Views , Darling Harbour Views , North Sydney to the City Views over the Harbour ..... and the list goes on.

What you need are a few tools and recommendations here from others. For great tools use the filter on this site : http://www.cheaperthanhotels.com.au/Australia/Sydney/ . Try the map filter and image galleries to give you an idea.

The most popular hotels [ in terms of activity ] are displayed here, but the numbers are skewed if the hotel is big. Also it covers a multitude of grades and it looks like you are looking for luxury or boutique .

Star City Hotel is one that's not been mentioned, but not to everyone's liking

Rates are changing by the minute in Sydney with the use of last minute distribution systems and i wouldn't recommend booking directly if you want to save money, use one of the many discount sites like the above mentioned one.