Well this is a topic close to my heart.
I feel, as a dyed-in-the-wool Western Sydney lad (live near Parramatta), that most of Sydney has never felt any connection to Sydney FC- partly because of location, and partly because of the image the club conveys in public.
Expansion is a must for the continued growth of the game in this country, and we will never have a better opportunity. We need to reward areas that have given so much to the game, which Western Sydney, Wollongong and Canberra have all done. I don't get why people jump up and down and make the argument that there will be too many teams in one state, or that 2 teams in one city is a bad thing.
How can it be?
EVERY major football city on the world comfortably supports at least two big clubs. Manchester, Liverpool, Birmingham and the West Midlands generally, Madrid, Milan, Montevideo, Cairo, etc they all have it. So there's no reason why Sydney and Melbourne can't be two-team cities and build up massive local rivalries to match any in world football.
The North-West of England- Greater Manchester, Merseyside and Lancashire- has well over 5 million people in a smaller area than NSW. And that region has clubs like Everton, Liverpool, Manchester United, Manchester City, Bolton, Blackburn, Wigan, Preston North End, Burnley, Blackpool, Oldham- some of the most recognisable names to English football fans.
The West Midlands has a touch under 3 million, and has Aston Villa, Birmingham City, Wolves, West Brom, Coventry and Walsall in its bounds. Then you go to the East Midlands (no more than 100km out) and find Nottingham Forest, Derby County and Leicester City. Once more these are easily recognised names for fans.
Nearly as much would live in a wider area stretching from Newcastle down to Wollongong, and stretching as far west as Penrith- 5 teams can be easily accommodated. If it's a good thing for football everywhere else, it should be good for football in Australia!