Iceland is probably the coolest place on the planet (no offence to everywhere else). For us, it felt like home, meaning everything we desire is reality there. For tree-hugging vegetarians, it's a dream, believe it or not. Reykjavik, especially, was amazing for its selection of vegetarian and raw food restaurants, and the countryside is just so otherworldly, it's hard to not want to stay.
We rented two cars (the first was a disaster and had to be returned, but I'm not going to name names; suffice to say, rent from a reputable national or international rental agency). With our second car, a VW Golf, we toured the southern coast as far as Vik, and returned to Reykjavik en route to the Blue Lagoon. Lots of gorgeous landscape, including the geyser at Geysir, the waterfalls at Gullfoss and Seljalandsfoss (great town for camping), the black sand beach at Dyrhólaey, and the famous volcano at Eyjafjallajökull (which caused air travel chaos in 2010). We didn't get very far due to losing a day with the first car, but we made the most of it.
Soundtrack track "Tornado" by the fantastic Icelandic musician jónsi (with permission as per http://www.sigur-ros.co.uk/band/faq.php#13).