When I was in Sydney I have booked Eva's Backpackers. The hostel is located in Kings Cross. City center and party hub is near by. I paid 34 AUD per night in a 6-bed room. Once per week they offer free BBQ. The hostel owns a roof top terrace but the view is... not that fantastic.
Link to Eva's Backpackers: http://www.evasbackpackers.com.au
Staff: friendly and happy to help