I'd replace the thermostat, and flush the radiator (and block while you're at it).

Regarding your heater, why it is initially hot then goes cold, its because the heater core is blocked, either due to sediment or rust.

The biggest mistake so many people make is mixing coolants. If anybody learns anything from this post, NEVER MIX COOLANTS, even from the same brand/manufacturer. If you ever need to top up coolant and its not from the SAME bottle you originally put into the car, only use water. If you're adding coolant, flush the complete system. Mixing different brands of coolant forms a sludge inside your cooling system, reducing its effectiveness or completely clogging the system up.

Remove your radiator and reverse flush it, odds are it isn't blocked with rust but only sludge. Reverse flushing involves getting a hose from a tap and putting it into the outlet side of the radiator and running the hose at full pressure. You'll see s**t of rubbish coming out of the radiator. Do this from all water entry and exit points until clean water is the only thing coming out.

Now, to clean your heater core. Start the car, put the heater control in your car on the hottest position and turn the car off. Unscrew both heater hoses from the engine (the hoses that come out of the firewall) and with an assistant, one person hold the garden hose into one of the water hoses and have the assistant turn the water pressure up slowly. Alternate hoses every few seconds, this will help dislodge the crap stuck in the heater core. Eventually a huge burst of water and sediment will come out, spray all over you, you'll swear really loudly and probably hit your head on something or cut yourself as you pull your hand away quickly. Happens every time. Now flush the heater core with full pressure water both ways until its all clear.

Now go to your auto parts shop and get an inline radiator hose filter. This is a filter for the water in your cooling system. Put it inline with the upper radiator hose after the thermostat (you'll need to cut the hose). Put the car back together and only fill it with plain water. With the water reseviour cap off, start it and let it run for 5 minutes. Turn the motor off. Remove and clean the filter. Repeat this process about 5-10 times until the filter has nothing in it. Now the fun part. Remove the radiator and heater core pipes again and reflush them. Put the car back together and recheck the water filter for crap 2 or 3 more times.

Now that the water filter is clean, fill the cooling system up with WATER only. No coolant. Run some radiator flush through the engine for an hour and let it sit there at idle. Flush the system out by attaching a garden hose to the small pipe on top of the thermostat housing and running water at low speed, allowing it to overflow out of the water reseviour, while the engine is running. Let the water run until the water coming out of the reseviour is clean, then run the water for another 30 mins with the engine idling. You want to be sure all of the crap is removed. Now remove, clean and refit the water filter.

Top the cooling system up with plain water and drive it for a day. Check and clean the filter. Repeat until no crap is deposited on the filter. Once the car has driven for a week with nothing getting stuck in the filter, you can fill the cooling system up with an appropriate coolant to protect the engine and radiator.

Assuming the radiator and heater core aren't damaged, this will restore almost perfect cooling system operation to the whole motor. It will also fix your heater.

At a worst case scenario, your heater core may burst (it would be buggered already and you've just brought forward by a few months what would have happened anyway) and your dash is coming out to replace the heater.

LOL.......excellent advice, and very detailed. I would imagine most ppl wouldn't go to this extent, but still some good info.

OK! your all going to think im an absolute moron! after opening the hood on saturday, i found that my radiator hose was leaking a bit, then found the radiator was BONE DRY! although id just filled it up not long ago, since filling it, the heater now works perfectly and the temp gauge is normal again, ill be taking it to my mechanic soon to replace the hose and some brake pads too!
thanks for all your suggestions though
Jason

Jason, at the risk of sounding like a a***, totally not intended, be paranoid about all the fluids in your car... ok, your radiator was bone dry - I'd be paranoid about that for about a month if it was me, and I'd probably be checking it daily...my car is a pre-crossflow so its not quite as critical for the potential of head damage, but I check my water/ oil/ clutch and brake fluid at least once a week even if there are no apparent problems, daily if I have concerns about something...

Yes in the meantime while i wait to get it in the mechanic, ill be checking every 2nd day with the radiator water, check its all topped up, i know the oil is due to be checked soon so ill be doing that too

OMG

Well there's no morons when it comes to cars. This sorta s**t happens...

But 10L of coolant doesnt just disappear... any leak like that from a rad hose would have prompted questions from family members and friends "how come you always leave a puddle on my driveway?"

Replace the hose which appears to be leaking immediately. Pressure in the system can get very high when at operating temp. And watch that header tank like a hawk!!!

thing is, theres never a puddle at all in teh driveway, iv been watching it, nothing, no drips or anything, prob just happened over the passed couple of weeks real slowly

prolly already done the head in then...
i'd get out there right away and replace that hose - half an hour job and certainly NOT worth paying a mechanic to fix - you'll pay near 100 to get a $20 part replaced. unless it needs a full service, in which case by all means.