I know it's only early April but it's never too early to start planning your upcoming New Year's Eve. Sydney is well-known for it's spectacular fireworks display so it's often hard to find a vantage point that will give you a great view and with less people. Balls Head Reserve located in Waverton was where I decided to spend my NYE2011 and I absolutely loved it. The Reserve is about a 15-minute walk from Waverton station, which is just a few train stops away from Central.
The Reserve is situated on a cliff so it there's a lot of rocks and isn't very grassy towards the top. I strongly recommend you bring a picnic rug or something comfortable to sit on. The area isn't as popular as Circular Quay and Milson's Point so there are fewer people, however as the night progresses, more and more people tend to flow in so it is also recommended that you get there early to claim a spot that will give you clear view of the bridge. The reserve is also in quite an isolated area so there aren't many shops and supermarkets are around, so if you are keen on spending the day and night there, make sure you pack your own food. It is a great place for a picnic - lots of fresh air and of course, a breathtaking view.
Just one final suggestion, and this is an absolute must - make sure you bring a flashlight or torch with you if you intend on staying for the night. The pathways are rather rocky and it is extremely hard to see what is ahead of you when it is dark. But other than that, it is a great venue with extraordinary views and a great atmosphere - not too crowded like many other venues so you can actually breathe!