Well Iceland used to be expensive but since the economic crisis the value of their currency has dropped a lot and it is much cheaper.
The natural sites to see in Iceland are amazing.
Things definitely not to miss:
Gullfoss - http://en.wikipedia.org/wiki/Gullfoss
Blue Lagoon - http://en.wikipedia.org/wiki/Blue_Lagoon_(geothermal_spa) about 10 years ago
I know quite a few people who went there and one of them summed it up with a beatiful quote "imagine getting on a spaceship and going to the moon, well Iceland is about as close as your going to get on earth".
Apart from all the amazing natural stuff tho, the capital Reykjavík is apparently an amazing place in itself. A few of my muso mates got lost there chillin out in record shops listening to the massive amount of awesome music that comes from the place. Also if your pocket is feeling heavy its a good place to go out. Also apparently the Icelandic people are the most beautiful people on earth, probably has something to do with their rediculously hetrogenus population where no 2 people are further related than 4th of 5th cousins. about 10 years ago