Iceland is a really, really beautiful and unique country (especially the north!), but it's a very isolated place and the city, Reykjavik, is quite small. I think 80-90% of the population live in Reykjavik, but there's not a lot happening.
It was fantastic during summer when it was 24hour daylight and you could wander the streets at 3am wearing sunglasses and have dinner or whatever, but I just don't know what you'd do if you lived there.... especially through the winter 24hour darkness months. I think I'd find that quite depressing.
But do go for a holiday!! You'll need a sh!tload of money, but the hot springs are fab and they even cook bread in the ground using the heat from the earth. Be warned though that the showers are also geothermally powered and smell of sulpher which will turn all your jewellery black.