We went last summer, flying Easy jet. We're going again for a pre Christmas short break this year. Last year the DC were 3, 8 and 10. We had a fab time. We didn't go to the blue lagoon because we fell in love with what the DC called the epic swimming pools. Fontana. A series of small pools ranging from warm to hot, a series of steam rooms and a lake with very hot and bloomin cold spots to go into. Its on the golden. Circle route.
We enjoyed geyser and the various other geysirs all around it (just on the edge of the road with free parking so easy for those not into long hikes) the restaurant at geysir is lovely for a multicourse buffet with lots of local dishes to try. Young dc are free, older ones half price and adults about £18/ head. The menu included hot drinks and water so for Iceland a good price it was our one big meal out. Weneeded to book in advance to get a table as it fills up with the coach tours. Gulfoss the big waterfalls at the end if the big glacierare worth a visit. Amazing, really cold icy wind but beautiful. There was a lovely cafe in the stunning setting which did great warming hot chocolate.
On route back towards Reykjavik is Hveragerdi geothermal gardens not fancy gardens but a series of hot springs the DC favorite bit was fishing for eggs. You can get a fish net and hens egg from the shop and cook it it the hot spring water then stand in the cool open air peel and eat.
We went on a whale watching tour (we did see some too) again DC free.
We are looking forward to seeing it in the cold and are going for just four days this time. When the youngest is about 10 we'd like to go back in summer season to do inside the volcano tours which involve hiking, horse riding, the glacier lake, sledging/ skidooing on the glacier etc.
One thing to allow for in your budget is car hire. For a basic 4x 4 your taling about £100 plus per day.