We and our 5 yo enjoyed the Blue Lagoon immensely... lots of shallow areas not too hot. A bit costly like most of Iceland.

Stayed @ Hotel Floki, small ok family place with-in a short 15 min walk to Reykjavik's downtown. Nice B'fast buffet nothing fancy. Its near the National Iceland Cathedral... Visited the Cath., take the elevator to the top... good look out to view city and harbor...

Did a bus tour for a day that visited Gull floss (large waterfall, THE gyser, a country side Skalholt Bishop's church.
Saw abit of the landscape... bus dropped us back near our hotel

Was just 3 days as an extended layover w/ IcyAir

HopeThisHelped

Yes thanks...our 4 year old loves to swim and the Blue Lagoon is a definite must do for us. Do you know if there are any pools which are especially child friendly near the town? I thought I read that some of these places have slides etc for kids

Also, anyone have any good suggestions for a place to stay between Rejkavik and Akureyri? We are looking to spend one night between the two places to break journey.

itwk,

We're going in august and we're staying as Hostel Osar between Reykjavik and Lake Myvatin (we're just passing through Akureyri). It's a bit off the beaten track, but it's on the coast and near beaches with seals, etc. Might be a good place to take the kids for a day or two. I believe you can book right on the http://www.hostel.is website.

Another place you might want to consider staying for a night or two is Skaftafell National Park. It's another couple of hours drive on the Ring Road to the southeast of Reykjavik, but there are many waterfalls and places to stop along the road. We're staying at Farmhouse Bolti, which is actually in the national park (and was recommended by someone on this board - in fact we emailed the travel agent Bruno that she used). There are a couple of tours and such near by that would probably be pretty kid friendly. Check out these websites for ideas:
http://www.hornafjordur.is/glacierlagoon
http://www.hofsnes.com/coast.htm

Hope this is helpful!

We spent about two days in Iceland and went to the Blue Lagoon and on the Golden Circle tour. When I go back (positive thinking) I want to go to Jokulsarlon, the Lake of the Icebergs and I would also like to go horseback riding on an Icelandic horse. Your kids are too young to ride a horse but they might enjoy the boat ride around the icebergs. Your kids might also enjoy feeding the ducks at the lake in Reykavik. Have a fun trip.

itwk,

To answer your question about access.

At Skaftafell there is a made path nearly to the foot of the glacier and then a rougher path to right beside it but that may be a bit tough for the kids. At nearby Svinafell you can drive on an unsealed road virtually to the tip of the glacier then there are tracks to it/to places with good views.

Just east of Myvatn on the Ring Road there is a car park right by the hot springs etc and easy walking round them (but claggy when wet, though dries out quickly). At nearby Krafla you can drive virtually to the Viti crater. Just before Viti there is another car park with a path across to more hot springs then into the lava field (still warm and steaming) from the Krafla fires.

Gotafoss waterfall has parks and easy paths. East side is better.

Detifoss has a path from park which gets used by many visitors of all ages, but your tiny would need help. East side road is better, and path looks much safer than on the west side.

In Reykjavik itself is the lovely Laugardalur Park (actually a series of parks) which has a great kids' section with a "driving" course and mini steam shovels and such, as well as a little zoo with things like reindeer. It's also got what's supposed to be one of the city's best swimming pools.

Have a lovely time; Iceland is wonderful.

Just outside Reykjavik there's the Arbaejarsafn, an open air museum with lots of old (for Iceland) houses and farm buildings. It's a pleasant walk around and there are animals as well - some hand reared lambs/goats, which you children might like. (It's also a fascinating glimpse into a way of life now lost, for you). And I second the suggestion of feeding the ducks on the lake at Reykjavik.