This is a unique bike trail that lets you circumnavigate the city almost entirely on dedicated bike paths, approximately 30km. Navigation can be a challenge at times and we used a book called "The Casual Cyclist's Guide" which was really helpful and highly recommend it. We did this cycle many times when we visited Melbourne for 3=2 weeks in April 2012, in different directions and always with detours into city suburbs to explore and stop at our favourite cafes.
I have a couple of blogs that might interest. Firstly, cafes visited in Melbourne by bike; http://spottedatespressomelbourne.wordpress.com/ and what to do in Sydney if you have 7 days; www.sydney-jono.blogspot.co.nz
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