Marcos Baghdatis almost pulled off an upset of his own by taking 10th seed Grigor Dimitrov to five sets.
The 2006 finalist spent much of 2014 on the second-grade Challenger circuit but, with Melbourne's large Greek and Cypriot population cheering him on every point, the world No. 84 troubled a shaky Dimitrov.
His still-impressive Melbourne Park record dropped to 15-10 after he lost 4-6, 6-3, 3-6, 6-3, 6-3 in just under three-and-a-half hours.
The sixth and seventh seeds, Scotland's Andy Murray and the Czech Republic's Tomas Berdych, will join Dimitrov in the fourth round after easy straight-sets win.
In the women's draw, Caroline Garcia butchered an opportunity to defeat Eugenie Bouchard before the No. 7 seed woke up and demolished her French opponent
Garcia had beaten the Canadian at their only meeting last year and played best in the opening games.
Three times in the first set, Garcia failed to consolidate a break, including during a marathon 24-point game.
Garcia's serving capability - averaging 173-kilometers per hour on the first serve - was all but cancelled out with less than half of her first serves landing in.
Eventually, Bouchard found her groove, attacked Garcia's second serves, controlled all the play and won the final eight games to progress to the fourth round 7-5 6-0.
China's Peng Shuai came back from a break down, then 4-1 down in tiebreak to win 7-6 (9-7), 6-3.
As Shvedova served for the set at 7-6, Peng defended on her forehand side multiple times before a down-the-line backhand saved the point.
After being broken at 3-3 in the second, Shvedova took an extended break off court but it did nothing to arrest the Peng's momentum.
Peng missed two opportunities win the match on Shvedova's serve but when presented with a third, Peng triumphed with a spectacular run-down.
From meters behind the baseline, Peng sprinted crosscourt to reach a Shvedova drop shot, but was so late on the ball, her only choice was a backhand whip crosscourt, superbly executed.
Simona Halep, who made the quarter-finals here last year before a French Open final and Wimbledon semi-final, confirmed she will feature high in the second week with a smooth 6-4, 7-5 win over Bethanie Mattek-Sands.
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