I've got fabric samples coming out of my you-know-what at the moment, and it continually surprises me just how many fabrics houses are in Sydney (with literally thousands of fabrics). In the market from some re-upholstery or a set of fancy drapes? My top picks for an amazing selection of textiles and wallpapers are: Julia Garner, Seneca Textiles, Unique Fabrics, and the very popular Mokum (just one thing, you will just need to know someone 'in the business' to buy from all these guys*). One shop you can visit freely is Calico & Ivy in Balmain with a lovely range of quilting fabrics and yarn...plus very pretty merchandising. I finally got the chance to check it out this week, and was very impressed with the space.
* Don't forget Bargain Upholstery in Seaforth - fabric remnants etc. from the four places listed above, but at bargain prices.