I loved it and it was a bonus that it was a very economical vacation.
I stayed at the Hotel Reykjavik Centrum in 101 and it was great.
http://www.hotelcentrum.is
I would find a hotel that includes a breakfast in the rate, just for the convenience of being able to grab a quick brekkie before you start an early day without having to leave your hotel. We opted out of this but realized that it would have been handy as we started our days very early and I didn't always want to go out and seek breakfast. We went during winter so we only had 4 hours of daylight each day. So depending on what time of year you go prepare for the expected weather and daylight.
I don't know how active you are, but I walked everywhere. The city is very walkable.
We took day trips almost everyday out to the surrounding areas which was fun and touristy.
The next we go I would do the Blue Lagoon enroute to or from the airport. It just makes more sense, so you don't have to make a trip out there for the Lagoon alone. The Lagoon is set up very well to accomodate people straight from the airport. They provide a place to store your lugguge, towels, hairdryers, body lotions, every thing you need to make yourself decent.
If you are thinking of planning some excursions and are undecided on what to do or which company to go with, keep in mind that day trips or touristy excursions can be booked at the last minute and we were able to book through the hotel front desk. The price is the same. Reykjavik Excursions is like the McDonalds of tour companies out there and have tours running everyday (even holidays). We went with a smaller company, Go Travel. The Go Travel is smaller and much more intimate. This suited us better, but for somethings like the Lagoon we used Reykjavik Excursions.
I had to work during my trip as well, but that was made easy as there is wifi connections everywhere. Credit cards are accepted everywhere which made it very handy (even the smallest businesses.) Things in general (eating out, services etc...) worked out to be way less expensive compared to North America.
You must have a hot dog at the hotdog stand. It's the best hotdog I've ever had. (Seriously, it's one of the reasons I want to go back.)
Iceland Air has great deals and next time we will take advantage of the free stop over option in Iceland before continuing on to Europe. It's definitely a place we will go back to.