I frequent an Australian parenting a forum and I posed the same question. Personally I prefer a politely said "what?" and teach my children the same.
They are all going off their rockers with outrage that I could teach them something so rude and that "Pardon?" or "Pardon me?" is well bred Australian.
I'm sticking to my guns.
I hate "Pardon?", and find it a bit LMC or low brow if you like but then I was brought up in England.
I would love to get your opinions.