I would agree that it's between the Borg and the 101.

The Borg feels slightly more luxurious, more homey, less cool, and it is a bit more central (without the uphill walk !).

The Blue Lagoon Clinic, near Keflavik, is a hotel worth considering if you have time to kill, for example at the airport. Unfortunately, their private lagoon pool is only open between something like 08h-18h.

The whole island is very disappointing in terms of hotels, but it is still worth ONE visit. It even gets a lot worse if you take the quick flight to Greenland (from Reykjavik city airport - take the immediate flight back, the 2 hrs are enough!).