i'd go! Newcastle itself is quite industrial, its docks area has just been rejuvinated, but has great beaches, merry weather beach in particular i recall. Lake Macqaurie is close by too, which, i think, is the biggest lake in NSW. Great communities on the shores of the lake, which is where i would probably live and commute. Not sure about suburbs of the city etc, but CAT me and i will email your questions to my rellies. They live about 30 mins south of newcastle. The best thing about the area is its close proximity to hunter valley, and only about 2 hours drive down to sydney, direct easy train link down too. Am v jealous, we are not going this year as our twins are 2.5yo and i can't face the trip. The first years trip we have missed since 2000.
I lived in Newcastle for 6 years, quite a while ago now, going to uni and working (my little sister (20) is now going to uni there). It is not as industrial as it used to be as BHP closed down most of its operations. I used to live at Merewether and The Junction. My Best Friend lives at Belmont near the Lake and her kids go to school at Caves Beach, but my preference would be to be closer into the city and beaches - I guess it depends whether you fancy surfing or sailing. I actually worked for Newcastle City Council for 4 years so I can vouch for good facilities, parks etc etc (oh the heady days of recruiting lifesavers . Here is a link to the Council site which should have lots of useful other links too: NCC
I am originally from the Hunter Valley and my family are still up that way if you have questions about it as well.
Having lived in Germany for 2 years recently I would encourage you very strongly to select Newcastle way ahead of Zurich.