Post: #1

Three sisters guesthouse
Good rates, nice owner, decent location. I paid about $650 a month for a studio during the winter.

http://www.hotelfron.is/english/rooms/
http://www.randburg.com/is/tourism/acco/...javik.html
http://www.infoiceland.is/infoiceland/ac...avik_area/

Post: #2

Based on my experiences:

Most of the action / nightlife is on a street called Laugavegur and along it's cross streets.

Located along Laugavegur:
-Definitely recommend Hotel Fron, clean, classy rooms and included breakfast
-budget option: Reykjavik Backpackers--a few doors down Hotel Fron. Most of the other hostels are ways away from the action.

I also stayed in CenterHotel Plaza on Adalstraeti, this hotel is a little off from Laugavegur but still within walking distance from nightlife and dining options.

For hotel deals, it's a pain in the ass comparing but I do recommend comparing prices/hotels between:
hotels dot com
priceline dot com
orbitz dot com
and expedia dot com
I used this method to find my accommodation that matches my budget.
There's a website that searches all hotel sites and compares prices (like Kayak dot com) but I forget.

Reykjavik is immune to google maps so I recommend (automatically translates to English if you use google chrome):

http://ja.is/kort/#x=356768&y=408352&z=9&q=laugavegur

to preview your hotel location relative to laugavegur street.

And for more options, buy the Iceland Lonely Planet.

good luck!