But let's think about why we ended up there and how the Icelandic lore you in!
First, Iceland Air. You are going to Europe but it's not the sometimes grueling 8+ hour flight (from the eastern US) It's less than 6 so yay! It's also about half the fare of a ticket to Europe in the summer. Big bonus.
We usually take 8-10+ days when we go away so we had 9 days this trip and when I looked at hotel options, ummm... well let's just say we'd have only been staying 4 at those prices. (which is why lots of people go short term on Icelandic Air packages) Airbnb.com to the rescue! There were tons of flats available and at much more reasonable prices. We landed a 2 bedroom flat that backed up to embassy row three blocks from the center of Reykjavik at $117US/night. Score!
Now being east coasters, we usually fly into wherever and find the cab stand. Well thanks to our Airbnb hosts they schooled us on the FlyBus. $15US/pp vs. $100+ cab fare. FlyBus is the way to get into Reykjavik. It will drop you at the BSI bus terminal and you can pay additional to go elsewhere by a smaller bus or you can grab a cab and then pay a more reasonable rate to your final destination. This worked out perfectly. Oh and FlyBus will always be there, even if your flight comes in late. They run round the clock!
So now here we are and what to do. Thankfully I had some forethought beyond just flights and accommodations to rent us a car for 4 of our 9 days. But the first part of the trip we were on our feet. The downtown area is easy urban hiking. We walked to:
Hallgrimskirkja - the big church
The national museum
The Harbor
The hot dog stand
Around "the pond"
And since we had a few days to read our travel guides, we realized that all the 'must see' stuff in Iceland is a day trip from Reykjavik and it's all FREE entrance (Except the Blue Lagoon) So if you are more than two people and don't mind driving on really nice roads without any road rage idiots, where everyone obeys the speed limits and stop signs, then by all means, rent a car!
The Golden Circle, Black Sand beaches and all the sights along the way are 100% free. Some are on private property and have a donation box out but you can visit all these places for the cost of your rental. Much more economical than the tour buses.
So the other big advantage of having your own flat is the ability to eat in. This is a huge savings because being an island, everything is imported and consequently you can spend a lot of money just on food. And wouldn't you rather have a nice Icelandic sweater or sheep skin to take home instead of a few extra pounds?
The woman at the tourist bureau who arranged the one 'organized' activity we did told us to shop at Bonus, when she realized we had our own flat. She said it was the least expensive of the three chains. She was totally right - love Bonus!
And we saw the Northern Lights one night from the balcony of our flat. Totally free!