Definitely go! I only spent 4 or 5 days there, but I loved it. I went in January about 6 or 7 years ago and it's not as cold as you might think. Greenland is actually the colder island. Iceland's weather is more along the lines of New York's or maybe Boston's.
Even though it's touristy I highly recommend the Blue Lagoon thermal spring. I still remember the instructional poster highlighting the specific body parts that it's important to clean(!) and definitely see the geisers, the waterfalls and the little Icelandic horses. We took a couple of tours which took us to all these places. I think one of the best parts was being taken to the top of a cliff where the sea was pounding below and the seafoam would freeze and float up to hit us. I also remember going to a very disappointing aquarium, which I would skip. There is also a locally-known restaurant which, at the time at least, offered whale as a dish if that's your kind of thing.
And, of course, they're known for their partying. I think one of their famous liquors translates into "black death" but I remember it not being too bad.
We stayed in Hotel Luftleider (or something like that) in Rejkyavik (eesh I know the spelling on that one's got to be wrong) and our room was very small, but very clean and adequate for what we needed.
Maybe check out
www.virtualtourist.com for more tips. I've been spending days on that site planning for our trip to Ireland.
Hope I helped at least a drop.
Christi
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