I do agree that tearing down many of the old buildings in the CBD was criminal, but there are plenty (OK, some) of neighborhoods that have more or less managed to maintain that ye olde Sydney feel (the Rocks, Glebe, Darlo, etc), and many of the newer developments in Barangaroo and Darling Harbour are positively nice.
Sydney is also (IMHO) more pedestrian-friendly than any city in the US except maybe New York, and it will get even better once the light rail from Circular Quay down a pedestrianized George St is up and running in a few months.
There's a whole bunch of reasons why Australia's cities are so bad (general cultural skittishness & lack of ambition, deep infestation & corruption of the political class by the real estate industry, etc), but the consequence is a few poor-quality over-large cities and sorry lack of emphasis on (not to mention investment in) human-scale regional towns.
But Australia (1) crushes its small population into a few huge cities (almost uniquely so I think for a non-city state?), and (2) is horrible at all urban scales. Is there anything as ugly as (say) Coffs Harbour (essentially a strip mall with cardboard suburbs) outside of the US?
If you haven't been to Australia, come to see our magnificent bush & coastline. Forget the cities (and wear blinkers if forced to traverse the 'burbs).