With kids
For older kids you might try giving them a couple of thousand kronur (about the same as a twenty) and setting them loose on Laugarvegur, the main shopping street in Reykjavik. There are cool music, clothing and book stores, plus hot dog, ice cream and candy shops. Set up a rendezvous location like Austurvöll, a cute city park downtown that's very popular in summer (turn left off Austurstræti at Pósthússtræti) and be free! Warning: Stores in the dowtown area are only open from 10 am til 2pm on Saturdays and are Not Open on Sundays !! Takes me by surprise every single weekend!
Of course there are the swimming pools, super popular with the young set, and also the Zoo and Family park (Fjölskylda-og Húsdýragarðurinn) in Laugardalur. The zoo is quaint, with a bunch or farm animals and some seal, reindeer, mink, a turkey or two and a bunch of hands-on stuff and things to climb to run off extra energy. It's inexpensive and very countryside in the middle of the metropolis. Check it out.
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Just surfing and found your comments and wanted to let you, and others who might read this, know that Sigur Rós is indeed still together.
We're bringing a scooter for the 5 year old to zip around on, and I can wear the little guy on my back, so we're looking forward to exploring the town, visiting the Family Park and Zoo, Videy, the Volcano Show for Mr Five, and finding all the little playgrounds around town (any hot tips?).
Is there anything else that would be good to know about? Bookshops, libraries, feeding the ducks? What does your wee guy like to do?
Oh, and there's a day excursion to the Blue Lagoon - would it be madness to take the kids there or would they love it? I get the feeling it's more adult-oriented than the city pools, but would love to hear what you think.
Phew, that's a lot of questions. I really appreciate your blog and would love to hear any further advice you might have for this age group -- and their mums!