Ricky,
Stay at The Nunnery in Fitzroy/Carlton.
It's an excellent backpackers/guest house... Emma (Wee Snow Drift) stayed there too.
Ask for Elly or Naomi, and tell them that Simon sent you....
It's two minutes from Brunswick St, one of the coolest places to hang out in Melbourne (check out the Veggie Bar if you want to bump into The Avalanches...

).
Kuya's right about The Lounge and Honky Tonks. Check out to see if there's anything live happening at either The Corner Hotel (Richmond) or the Prince of Wales (St Kilda).
Good food at Big Mouth on the corner of Acland St in St Kilda, and the best coffee in town at Atomica on Brunswick St Fitzroy. Good kebabs at McNicks (? Minna) on Fitzroy St St Kilda (just up from the Prince of Wales). Best breakfast in Melbourne at the Richmond Hill Cheese Shop, Bridge St Richmond, I particularly recommend the fruit of the day, followed by the cooked breakfast with veal sausages and bacon, which rocked my world on a regular basis (I lived 150m away).
Recommend you spend a day or two exploring the Great Ocean Road, in a hire car if you can stretch to it, as the coach doors are poop.
Let me know if you need more information...
Simon