Kookaburra Cottage is a great place to stay in Balmain. A walk to the harbour and ferry or up to Victoria Road to catch buses. Masses of eateries, a couple of supermarkets, and pubs in walking distance. Just a quick bus ride to the city (or a ferry ride on a sunny day is delightful).
Jackie and her family are friendly, very easy to communicate with and accommodating. It's my second stay.
The fact that dogs can stay (or visit) is great too.