We did Sydney in April, went to see The Lion King with my family so we had Nanna, Pop, two mums, two dads, five kids ages 6-1. We stayed at Freshwater Beach, just north of Manly, in a big house. I think that was a great idea - we were close to Freshwater Beach town, with some shops so we could buy and cook our own meals. FB also had some restaurants and pubs so we went out once to the pub, which was good.

Also it's only 10 mins from Manly and the fun of Manly - beach, aquarium (quite good but pretty small so we whizzed through it relatively quickly), ferries! Ferry across to Sydney CBD was awesome.

Other option is to stay around Darling Harbour, like surprised said, and do the reverse - ferry across to Manly. Public transport in Sydney is pretty good, don't drive, driving almost killed us, literally and figuratively.

Our kids LOVED the water play area at Darling Harbour. Even though it was a little cold they all had a blast. DD fell in and got soaked and after her initial sulk she was fine, had too much fun to care really.

We went to the Sydney aquarium also, which is bigger than Manly and we spent a good deal of time there. Really enjoyed it. But we are fishy people! We also did Madam Toussaud's and Australia Zoo, which are right next to the aquarium. Our kids were strangely fascinated by Madam Toussaud's and we spent more time there than anticipated.

We did not go up Sydney Tower, we'd wanted to but ran out of time.

HTH!