I'd spend one day looking around Reykjavik / Blue Lagoon (which I missed on account of a rather heavy hang-over) and then try to join a 1 day trip to the glacier (name???) for bit of snow-mobiling which was definitely one of the most fun things I've ever done, combined with a stop at Geysir, also a highlight if you'ver never seen one before. Plus the scenery on the way there and back is eerily beautiful.

I've taken cabs there - yes, they were expensive.