Depends on how much you want to see when you get there. Probably the easiest and cheapest ways for an independent traveller is to catch the train from Central Station to Katoomba - there's one every hour. And you can walk from the station to the YHA or other centrally located hostels. There's a hop-on, hop-of bus that visits all the sights, or you can simply walk to the Three Sisters look-out or go down into the valleys on one of the fantastic short hikes.
If there's a few of you, hiring a car is a great way to go as you've got the flexibility of visiting some of the more out of the way places. One of my favourite walks is called the National Pass (6kms) and it starts in Wentworth Falls which is easiest to get to with a car.
if you don't fancy going independently, there's loads of single day tours from Sydney that you can book through your hostel. The drive is about 2 hours each way in a bus. about 6 years ago