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Travel Itinerary/ planning Advice

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We are 3 people who will be in Iceland from Friday August 29 to our departure on Saturday September 6th. HIPPEE!!!! We have 8 full days/nights to play with and wish to spend the first Friday & Saturday nights in Reykjavik (witness a little of Renfur)and then spend the remaining 7 nights between the South to Skaftafell, the Southwest, and Western Snaefelles Peninsula. Looking for suggestions on how to make a fun itinerary tying these areas together. Need advice on a driving itinerary. Head North & west from Rekjavik first, or head southwest and across the south first? How many days in each place? What are the best lodgings in those regions to use as a base for daily hikes. It'd be nice to find places central enough to many places of interest as we don't wish to be in a new lodging every single night of our trip (every 2 nights would be best). We'll have a rental car. We want to do day hikes, check out museums & points of interest along the way, soak in hot pots, and hit galleries & museums in Reykjavik. Also... we are predominantly vegetarian (we eat a little fish from time to time) so any recommendations for veggie food/restaurants is greatly appreciated.