This is sooooo subjective. Of course everyone is going to say where they live is great....including me :-)
I live in Paddington and love it as I'm so close to everything and the area is great, lots of nice bars, restaurants and cafes - not to mention the fab shopping! For the first year you spend your whole time traveling in to the city and out to see people so it's good to be located near to good transport links and as central as possible. Majority of people then move further out when they have a good idea of where they want to settle and perhaps where their friends are/work etc.
Totally understand why families wouldn't want to live in the East due to prices and smaller properties (I'm of course generalising here) but on the same token, I'm not that keen to live in the North as all my friends and entertainment and events happen in the East (Surry Hills, Darlinghurst, Paddington) and I love having a short travel time to everything.
At the end of the day you just have to get out here and see for yourself, try and spend as much time as you can looking around and see where you feel you fit! Good luck
although manley is very nice but very expensive, we are moving over soon, and looking to go to either Elderslie, Mount Annan area of Campbelltown, weve been twice and its very nice, felt like we belonged there, and only 40k from sydney .