I spent three nights here and generally enjoyed very much. The location is excellent: there are many restaurants nearby, and the city center is 10 minutes' walk. Boat excursions leave from the harbor almost across the street from the hotel. Busses for tours and the airport pick up at a covered stop just outside the door.
My room was possibly the tiniest hotel room I've ever stayed in, but that was fine for just me. (It would have been very tight for two, not to mention privacy issues with the bathroom.) Honestly, I was too busy to spend much time there anyway, and I found it cozy, if somewhat overheated. My room was on the 3rd floor facing the street. I didn't find the street noise particularly intrusive, but the hotel provides earplugs if that's an issue. Wifi worked well and the water pressure in the (tiny) bathroom was great.
The decor everywhere is really fun, and there are lots of public spaces to hang out.
I do have one complaint. I paid about $16 in order to check out an hour later than usual. I arranged this the night before. Nevertheless--and despite a do not disturb sign on my door--during that hour the cleaning crew attempted to enter my room 3 separate times. Even after I told them I'd paid for late checkout and would remain until 1. I found this very intrusive. And yes, when I checked out there was a record of my request and I had been charged the fee.
I had one meal at the restaurant, and it was tasty. Service was friendly. Prices for everything, including the room itself, were very high, but that's normal for Iceland.