It all depends if you don't want visitors seeing one of those pages. With a 301 redirect if someone attempts to visit page A they will be redirected to page B which means they will never see page A.

This is interesting because if you have your title tags with different keywords and your meta and content are different, it just leaves me to believe that in your content you have the same keywords, even though the substance is different.

Question are you on page 1 for both pages? That wouldn't be a bad thing as it would drive down your competition.

Thanks all.

You wouldn't get penalized for the 302. 302's normally aren't used because they don't pass along link juice but in this case that is not your concern. What might create an issue for you is that people will like your site and then choose to link to it, but it will most likely be the Sydney link structure if that's the route you go, most people copy and paste the URL and then use it as a link. Then when you redo all your structures you will have one city page with a crazy amount of link juice but a main URL with no link juice. You won't be able to fix it either with a 301 because then no one will be able to see your Sydney page. You will create a problem for yourself in that sense. Hope this helps.

I'm a believer in planning for the future. So I would go with www.mysite.com.au and then have the city option of Sydney and with a comment "more cities coming soon" this way you wouldn't have to worry about having a 302 redirect or changing domains later. Hope this helps good luck.

My domain name is free with my service with yahoo but it expires every year and gets extended automatically as I continue service, how does this impact my seo efforts? I've heard that the search engines prefer sites to expire in 3 years or more? Is this a fact?

If they aren't in the same industry then doing a 301 redirect might make sense if you create a landing page reintroducing yourself to past clients and people who formally did business with you. So in this case the 301 redirect wouldn't be to your main page but to a specific page thanking them for their previous patronage and introducing your new brand. Hey you never know if they might be in the market for your new product or service. You might also consider selling your old domain since it most likely has good domain age and links pointing to it. Depending on the industry and authority of your site you might get a decent offer. Godaddy has an auction service or you can reach out to your previous competitors and offer to sell it to them and they can in turn do a 301 redirect pointing the old domain to theirs. Hope this helps and good luck.