We laid over a couple of days last year en route to Italy and loved it. Fascinating place; if you lay over, do the Golden Circle tour to get the feel of it. But, while the flights are cheap, once you are in Iceland it is really, really expensive. Think San Francisco. We spent over $70 on a dinner of soup, bread and one beer each at a fairly simple restaurant. The hostel we stayed in (bunk beds, bathroom down the stairs) cost more than any hotel we stayed at in Italy. Well worth the expense, IMHO, but be prepared.
Also, if you are going to Europe for a long trip, and are limited to 90 days in the Schengen Zone (as Americans are), remember that Iceland is in the Zone, so your day one in the Zone is the day you arrive in Iceland, not the day you arrive in mainland Europe. I learned this on a previous trip. Arriving at 11:40 or so in Reykjavík, I had to hang back at the end of the customs line so that I would be stamped in after midnight or I would have been in the Zone 91 days by the time I left.