Some of my Melbourne friends view Sydney as their second home. They love those white t-shirts that say I love Sydney, with love as the red love heart. Postcards are also great Sydney souvenirs, as well as those snow globes.
My relatives from overseas tend to like bringing back Australian nuts, tim tams and soft toys. I think it's more for sharing with other friends and family back overseas rather than a souvenir for themselves. I would recommend little shot glasses with a picture of a famous landmark to bring back to keep as a memory.