Melbourne is great for cycling!

You need to be careful on the roads as drivers can be ruthless on the busy ones. However, there are a whole network of bike paths. If you're a serious road rider, hire a road bike on Saturday for riding down beach road early on a Sunday morning. I've heard there are more bikes than cars (but I'm not sure if this is urban myth).

Probaby the best thing to do in terms of hiring bikes is to check out the bicycle victoria website. This link in particular maybe useful:

http://www.bv.com.au/find/4/6/

But a word of warning - you probably need to e-mail the bike shops to check out what sort of bikes they hire, as they may only be heavy tourist bikes.

If you are in the CBD maybe go into Bicycle Victoria itself and get some maps, they will show you the bike paths and useful roads to ride on.

Good luck. Drop me an e-mail if you have any specific queries.

Have fun and check out the great food and cafes in Melbourne!