The hostel's location is very picturesque - mountains all around and fields running down towards the sea - one could take a long walk among the icelandic horses, sheep and very rich birdlife - it is a paradise for birdwatchers! We stayed there for 2 nights, and although it's a bit far from Ice Lagoon and Skaftafell, it is easy to get there with a car. The closest shop is quite a distance away and there's no restaurant in the neighborhood, so visitors are advised to bring enough food to sustain themselves.
The hostel can arrange ice driving/snowmobile tours on the Vatnajokull glacier which is a great experience, especially in the middle of summer! Generally, people working there are very nice and attentive - they even found a pair of sunglasses which we forgot in one of the snow overalls provided during the tour, and suggested to send it over to us, but we thought it's not worth the trouble.
The rooms are nice and clean, and the beds are very comfortable. Our double room had a real queen-sized bed, a table and a small sink with a mirror and of course lovely view from the large window.
The only thing I didn't like about this place is that it tends to get overcrowded in high season. The hostel itself isn't very big, but all the facilities seem to be located in the main building while also serving those staying in private cabins, mobile homes and camping tents. The kitchen, dining and sitting area are full of people, and there are queues to toilets and showers. Also, there's not enough privacy in the showers - the shower cabins have partial walls between them much like to those in public toilets, and you have your neighbour's soapy water running into your space.. I think this could be improved in the future.