Here are some of the cheaper hotels and guesthouses. Some are only open during the summertime, others the whole year around.
Reykavík Guesthouse
A quiet neighborhood, only a few minutes walk to down town Reykjavík
Travel Inn Guesthouse and Guesthouse Pavi
Both are located in the center of Reykjavík
Floki Inn Guesthouse (see photo on the left)
Near the center, in a quiet residential area
Guesthouse Sigríður
Outside the center, quiet area
Bb44 Guesthouse
Located in the nearby village of Kopavogur. Direct bus to downtown Reykjavík
Fosshotel Suðurgata
Located in the University Area, near the center of Reykjavík