stayed at the elizabeth hostel (cant remember if spelling is
correct) when i was there 2yrs back. it is diagonally across
Queen Victoria Market - great place for breakfast. iirc it was aud
80-90 per nite. check out www.wotif.com for accoms.
pick up the tourist information booklets at the airport or at the
tourist information centre in the city. they are a great source of
info of wat is happening ard melb.
as for places to go to, my must go list as follows:
1) Queen Victoria Market - great for breakie
2) Federation Square - for interesting exhibitions n such.
Caught the Pixar Exhibition last Sep n it was awesome
3) Melbourne Observertory (bleah dun know the spelling) or the
new observertory thing. Great view of melbourne , u can even see
grampians iirc 
4) Hope onto the city circle (free of charge) and get a free
city tour! an other free transport is a Tourist's Bus (i think that
is the name). it bring you to all the cool places like St
Kilda's.
5) St Kilda's. There is a theme park there, beach, and rows n
rows of shops selling oh-so-pretty-i-can't-bear-to-eat-them cakes n
pies.
6) Casino. Just kay po look ard also shiok. I din gamble there
cos the odds looks sucky =P
7) Philip island. there are 3 kinds of ticket prices, get the
middle one. it would bring u really close to penguins. a word of
advice, bring a waterproof jacket with hood. the winds r damn
strong n cold. it rained when i was there n a waterproof jacket
with hood was a life savior.
8) Great Ocean Road. Great views, long drive, great photos.
Every time i'm in melb, i will set a day just for GOR tour =). if u
r in a tour bus, be sure to sit on the left side so u get the best
views heehee.
9) Grampians. Another great place for pictures n awesome views.
Remember to wear good sturdy climbing shoes. it's a mountain
afterall =)
10) Eat Soulvaki (sorry dun know spelling). it is like
turkish kebab but a whole lot better. there is a shop at the corner
of chinatown that sells them.
Most of all, when in rome, do as the romans do. if the tour
guide say dun take pictures of penguins, then dun... if you see
pple clear trays at macdonald's, just do the same... oh one
last word, the jap food in the city sucks, dun bother trying

have fun in melb! 