Too broad a question emalz. Can you give us an idea of your budget so we can recommend accordingly? Are you looking at separate rooms or two beds etc?

We can all stay in one room. I would like to keep the room below $300 ($250 would be better). Needs to be walking distance to the Opera House. Thanks

Check on www.wotif.com. It'll give you an idea of what's available at what price point. You may do as well or better on the hotel's own website so once you find something that works, check the hotel website to see if you can better the price.

You should look at the Rocks area, that's walking distance to the Opera House. Russell Hotel is reasonably priced. http://www.therussell.com.au/

Also try the Lord Nelson brewery, there have been good reports here from people staying there. Here's a list of hotels in that area. http://www.therocks.com/sydney-Accommodation_Dining_Bars-Accommodation.htm

W/end 2nd - 4th March is likely to be heavily booked within the CBD as the Mardi Gras parade is on 3rd.

We recently stayed at Sydney Harbour BnB--$155 for a double room with shared bath and a very substantial breakfast (served in the courtyard). Would recommend that if they have something suitable for 3. The Russell hotel was nearby. I agree that is the best area to stay. With just a weekend you don't want to waste time finding your way around.

You want to look at the Rocks and Circular Quay area. Take a look at the Sir Stamford Circular Quay. Lovely hotel, great service. It is across from the botanical gardens and easily walkable to the opera house and Circular Quay

Here's the site I use for Sydney accommodation - http://www.visitnsw.com/ - it's the official NSW tourism site. Also, if you're near the rocks and you like Japanese food, I recommend Nakashima.