I haven't stayed there myself, but Smyrlabjörg is a guesthouse between Skaftafell and Höfn that is supposed to have the best breakfast buffet in Northern Europe, according to my friend who is a tour guide. I believe they also have snowmobiling trips on Vatnajökull. If you are willing to rough it, Bölti guesthouse is actually a farmhouse in the middle of Skaftafell National Park and gives you the best possible experience of Skaftafell. It will be the smallest room you have ever stayed in in your entire life, with a shared bathroom (unless you get one of their coveted cabins), but worth it. Both of these places are fully booked all summer (I tried to stay there this summer but no luck), but you should be okay travelling in September.
When you stop at Seljalandsfoss, be sure to follow the path that leads away from the big waterfall to the right. You will walk past a bunch of little waterfalls until you reach a little river that seems to issue from a crack in the middle of the mountain - until you look closer and discover Gljúfrabúi, a really cool hidden waterfall inslde the crack. There's a huge rock next to it that you can climb up to look down into the falls.
If you want to stay in one of the nicest/most luxurious hotels in Iceland, Hotel Rangá is in a great location for travelling in the South. And if you want to try Ethiopian food in Iceland, there is a new restaurant in Flúðir, pretty near Gullfoss and Geysir. I was pretty impressed with the food, but they don't seem to be able to get the grain needed to make injera, so it was more like crepes. You can also get amazing lobster/langoustine in Höfn at Humarhúsið.
Posted Aug 31, 2011