We are 3 couples mid-late 20's travellng from Cairns to Sydney at the end of January 08. We are back-packing most of the way using Grey Hounds I presume.

Would love any advice on where to go, what to see/do, places to stay, stuff to pack etc.

First of all, you will be in for some rough wet hot and humid weather in Cairns about the end of January, there having been predictions of a greater likelihood of cyclones for the far north this summer than we have had for a few years, and without them there could still be plenty of rain, and maybe some localised flooding.
Start off having a look at Queensland Holidays - Queensland Tourism & Travel - Queensland Holidays and use Travelmate - Australia Accommodation and Hotels, Tours, Car Hire, Maps, Australian Travel Guide as a guide to distances.
A few favourite sites of mine in the Cairns area for info, organising activities and places to stay are Cairns Tours, Holiday Packages and Accommodation with Raging Thunder (a live chat operator available) Atherton Tablelands Backpackers Accommodation & Tours - near Cairns, North Queensland, Australia (tablelands relief and active tours/night canoeing etc.) and Cape Tribulation Beach House Cape Tribulation Resort Accommodation in Cape Tribulation - Cape Tribulation Accommodation on the beach at Cape Trib for hanging out in the jungle.
The Queensland Holidays site will have references to places to stay and it will be very muggyall the way down the coast, perhaps less rain in places further south - Mission Beach/Dunk Island, Townsville(good marine interpretation centre)/Magnetic Island, Whitsunday Islands (Whitehaven Beach), Cape Hillsborough, Great Keppel Island near Rockhampton(great botanical gardens and crocs in free mini zoo attached), 1770 (first surf and possibility of reef visit if it was too wet further north) Fraser Island and Sunshine Coast, Brisbane, Gold Coast and Byron Bay, and then plenty of amaller beach towns going along NSW coast - google NSW.

I'd suggest that with six people, you ought to consider getting two vehicles, splitting up the most quarrelsome couple each day, just joking, but three in a car will be cheaper than greyhound and offer far greater flexibility - you could even go for mini camper vans and also buy a cheap tent - there's wicked campers, calypso, apollo, and hippie - just google them and you'll be able to compare hire rates, roughly all aboyt the same and possibly calypso and apollo being better ones.

As to what to bring, most aussies wear thongs (the feet flipflops) shorts and Tshirts or bathers in most of summer and other than that, some more casual gear, maybe buy a poncho(for the rain), sun hat and fly screen in Cairns where you'll also be able to buy sun cream, insect repellant and general stuff like that.
Hostels are more often used by singles or couples and with six, if you're not vanning /tenting in a national park or camp ground, you could also consider without vans, getting two small cars and more tents or using on site vans and cabins in caravan parks - one for six will prove very economical and you'll have a degree of comfort - great BBQ facilities and often a reasonable pool.
School is back the end of January, and you'll have no problems getting in as you go, no need to book ahead.
And go (like a bat out of hell) you might want to if weather is shitty up Cairns way.

Have fun , for at least when it's wet, it will not really be cold but a cooling relief until it stops and steaming starts.