We stayed at the City Centre Hotel from 28th Jan to 31st Jan 2013. We can't recommend it highly enough. It is small with only 30 rooms but has a 24 hour reception. Our room (505) was great with a very comfortable bed and also has a balconey. The staff were all so friendly and helpful. Breakfast was very good with plenty of choice. There is a micro brewery inside the hotel and the room is also used for breakfast (it didn't smell of beer). The micro brewery opens at 4pm for a 3 hour happy hour. They have several beers on draught and over 100 in bottles!! The location in downtown is perfect for walking to everything around the city centre. The hotel doesn't serve food apart from breakfast but you are only seconds away from many places to eat and drink. The only surprise for those who have not been to Iceland before is that the hot water smells of sulphur (but is harmless).

A friend and I stayed here for a week. It was a wonderful experience. It was very clean, centrally located and front desk people very helpful. Lots of great restaurants within walking distance; Harpa the concert hall is also within walking distance. Tour companies will pick you up and take you to the starting point of sightseeing trips. It tended to be noisy on the weekends but call the front desk and they will see to the problem.

Stayed for 5 nights and this cozy hotel served as a wonderful base for exploring downtown -- within walking distance of the main shopping street to one side, the marina to the other, and the symphony hall straight ahead. The famous hotdog stand is a mere 2 short blocks away. The main BSI bus terminal is about a 15 minute walk away. The cathedral is about an 8 minute walk up the hill. There is a micro bar downstairs that is very popular at night & serves a good variety of beers.
Breakfast (extra charge) is available in the same space from 7-10am.

Pros:
Fantastic location, close to the bus stop, tours will pick you up from the front door, LOTS of places to eat & shop nearby, convenience store pretty much across the street, good continental-type buffet breakfast (I really enjoyed the fresh baked bread from the local bakery), Free wifi, clean room decorated in a modern fashion, comfy bed, good value for what you get, friendly & helpful staff

Cons:
Not much of a view outside the rooms, light sleepers might be bothered by the noise from weekend bar hoppers

All in all, I would recommend staying here. There are only 30 rooms, so book right away or you could miss out.

Had a fantastic stay here.

The good:

Great hotel in a great location, close to pretty much everything downtown
Lovely staff, super helpful.
Great bar downstairs
Great water pressure and showers, despite the sulphur smell.
Free parking out the front if you rent a car. Name another hotel in a capital city where you can park for free outside the front door.... :)
Free wifi - always a winner..

The not so good.

Can be a little noisy on Friday & Saturday night as there are a couple of bars/clubs nearby and these guys go for it.
Beds were maybe a little soft, but no big deal really.

All in all though, would totally recommend staying here though.