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Iceland trip help please!

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My husband and I just decided to go to Iceland for the last two weeks of June. We have a 16 month old daughter so are thinking of renting a house or two and using them as a home base. I haven't yet decided if we'll spend our full two weeks in Iceland or try to do a stopover there and then continue on to Oslo or somewhere else in N. Europe.

My questions are-if we do rent a house, what area would be the best that would allow us to see the most sites without having to spend all day in the car? Our goal isn't to see all of Iceland, we just want to see some of the major sites and are perfectly content to just spend some days near our rental and go for walks, cook, read, etc. I also am not comfortable with being more than an hour from medical care in case our child needs it so that will certainly limit the areas we see. I'm thinking we may rent in one area of Iceland for 3 or 4 nights and then move along to another area.

Please give me your best advice for such a trip. What would you consider must-sees, and what would you leave out? Is two days in Reykjavik enough?

Thanks all!
Jennifer

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