Stayed here for two nights in co-ed dorms. It is right in the heart of Laugavegur district, many cafes, restaurants, shopping and bars nearby. Staff is hipster-y but friendly and helpful. The dorm rooms were nice and comfortable. Luggage storage available (can also leave luggage for a couple days after your stay if you will be hiking/touring/etc and don't want to take everything with you). Rooms have good sound insulation (there is a bar/club right below it - we stayed on a Saturday night, music was bumping but could not hear it, or street noise, in the bedroom).
Things took a turn for the worse when using the shared showers. We booked this hostel after a 5 day hiking trip, so we were ready to get clean. The showers were awful. No water pressure...and no hot water (odd in a geothermally powered city??). They were filthy...dust, hair everywhere. If you stay here, go to the city pool (Sundlaugar!), it is only a few blocks away and for 500 ISK you can soak in hot pools AND take a decent shower!
Also, no laundry facilities available. I wouldn't want to do the backpackers laundry load in the sink here because of the aforementioned...I did not use the kitchen, so can't speak to it's condition.
Shower at the city pool down the street instead.
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This review is the subjective opinion of a TripAdvisor member and not of TripAdvisor LLC.