Staying in hostels is a great way to meet other travellers.
I would normally advise travellers to be spontaneous and not book anything, however Sydney can get very busy (with all the good hostels filling up) during the Christmas/New Year period so you may want to book a hostel in Sydney in advance.
Don't book any of your other accommodation in advance. Keep your travel plans flexible.
When you get to Sydney look at the noticeboards in hostels to see if there's anyone with a car who wants to share a lift in exchange for your share of petrol. It's not always reliable (since there may not be someone going where you want to go) but it is worth checking before you decide to buy a bus or train pass. You can also try BUG'ride sharing site:
http://australia.bugride.com.