Just to add....... the 'Wakeup' in Sydney is fantastic, had a great time there, very clean and friendly, its also very central, which is good, it's a bit more expensive than some but you get what you pay for !
It's quite new so isn't in the latest edition of Lonely Planet, but it's well worth a stay.
The YHA (11 Rawson Place) is ok, clean etc but very sterile atmosphere, so not so good for meeting people and making friends.
The best hostel I stayed at in the most gorgeous place in Oz was Geoffs Place - linked through YHA but not in the books, it used to be a real party place, bit scummy but it's been taken over and done up, the wooden chalets are gorgeous and it's a stones throw from Horseshoe Bay on Magnetic Island (my very own uncommercialised paradise!)
To get there, get the Greyhound from Cairns to Townsville and then the ferry across to Magnetic Island, it's well worth it.
Happy Travelling.
Hope this all helps.