It's a question impossible to answer. And it all depends on how much money you have. Obviously the best suburbs are around Sydney Harbour and there are a lot of them. I disagree with Newtown being the "best"....it would be pretty much at the bottom of my list. It's a good suburb for singles and those who want to buy take-away every day. The streets of Newtown are narrow, very dark, and because most houses have no garages, it's almost impossible to park. Lots of houses are in need of renovation and some are in pretty bad condition and therefore some might not be the "ideal" neighbours... The traffic along Parramatta Road is horrendous at all times and King Street is also extremely busy. This is just my point of view, but inner city suburbs are totally overrated and totally overpriced.
Newtown by far. It has so much to offer from great coffee houses, restaurants, art galleries, trendy wine bars and great pubs. It has east transport to the city and Darling Harbour and easy access to the airport. It has an amazing community who really support each other and the local schools are fantastic and extremely well thought after.