Melbourne is a classic city that reminds many visitors of San Francisco in some ways, as its art and food culture are notoriously the best in the country. Unfortunately Melbourne can also be very expensive for international travelers. The strength of the Australian dollar has been volatile in the past few years, and in early 2010 it has approached record levels against the USD and the Euro, so things will be particularly expensive for most people until that changes.
Standards of everything are generally high so finding cheap hotels and hostels isn’t as easy here as it is in many other places. There aren’t many street-food options either so if you want a cheap meal then you’ll have to consider fast food or self catering.
Fortunately there aren’t a lot of must-see expensive attractions in Melbourne so if you are mostly coming to look around the city center and visit the various neighborhoods then things won’t get out of hand during the day. And you can still take the tram loop around the CBD that has running commentary pointing out the sights, for free.