The last time we went we found that it was so busy with tourists it was difficult to get a table at a restuarant - certainly not the better ones - without booking ahead.
Its probably not that bad at the moment given the circumstances, but its definitely worth keeping in mind for anyone making notes for next time.
Given its so expensive to eat out we've done our own sandwiches / gone self catering so that we keep the costs down a bit and then picked the places we wanted to go most.
Personally I think the Golden Circle is a bit of a nightmare to do these days and there are much better and more interesting tours if you do some hunting around and look for smaller operators. The crowds on the Golden Circle aren't fun.
@mrsrobin The first time we stayed in Iceland we based at Kirkubaejarklauselur. It was really good as a location to do the southern ring road. Its far enough around to do some good day trips out further than the coach tours usually go or it at least gives you the time to beat them, and theres some amazing things to see.
Personally for a last night I would probably stay in Reykjavik before going back to the airport - depending on what time I'd arrive back in the city and what time my flight was. Simply because its really not a huge drive and there is more to do in the evening. There really is very little in Keflavik itself. As for Grindavik, the only reason I'd stay there would be to go for a night hike up to the volcano site. When we went there we found it - how can I say this politely - pretty grim. It an experience to see, as its a proper little fishing village, but its not particularly the nicest place to stay - but yeah its not exactly somewhere to actually go and 'see' if that makes sense especially if you are staying / visiting smaller settlements for the rest of your stay. Grindavik is perhaps the least inspiring place in Iceland I've visited. I'm sure this is likely to change in the next 18months if the volcano keeps going on. Reykjavik is definitely worth a visit on the other hand. It is not a big place at all. Its very pretty and unique. Although its the capital it really not that big. It is worth a walk up to the church and down by the sea front and around the lake one evening if nothing else. And there are some fabulous places to eat out. It just is a lovely little place.
If you do buy alcohol at the airport, I would recommend stayed as far away from the wine as you can. It seemed like Iceland imported the wine that the rest of Europe wouldn't touch!
I love Iceland and would go back again in a heart beat.
But be prepared for the weather. It is dreadful. I have never been as cold as I was whale watching. It gets in your bones in a way that you have to experience to understand.
If you hire a car any time other than summer make sure you are an experienced driver and have driven in snow. And make sure you pay attention to the iceland weather and road conditions. It can be very changable. We have nearly been caught out in March with an incoming storm when we had gone on a day trip. Fortunately we knew it was coming so had left promptly but we know that it was a problem that day in the area we had come from. DH is a very good driver and found it hairy.