Katoomba, the hub of the Blue Mountains, lies direct at the top of the Jamison Valley; from there, a cable car will carry you to the bottom of the valley. There are many scenic spots on the valley rim; the Three Sisters (named after an aboriginal tale) are the most famous one. The Giant Stairway, beginning (or ending) at the Three Sisters, is another way to reach the bottom of the valley - combining the cable car and the stairway makes a good round tour.
For accommodation, Katoomba offers a number of traditional hotels and a very nice Youth Hostel, the Blue Mountains YHA.