My 2 bob, if you stay in Reykjavik and only do guided tours you are massively missing out on Iceland as an experience. We did Reykjavik in a day, that was plenty as it's a fairly small city. We stayed in a self catering place in Fludir (45min drive), amazing log cabin in the middle of nowhere and the owner who met us on arrival gave us the best piece of advice: "don't do the guided tours, all the things they take you to see are there and best down on your own. The lights are there if the conditions are right, no need to have someone drive you around chasing them."
I personally didn't think it was outlandishly expensive however with the exception of one lunch we either made our dinner or ate well outside Reykjavik but a main meal (full rack of ribs and chips etc) was equivalent of £14. Booze is expensive but there is a duty free in baggage claim on arrival, use it! Blue lagoon is well worth seeing but for a true experience look up the secret lagoon. The glaciers are immense, the one trip we went on was a guided snowmobile one which we did enjoy.