Chris,
Eating out is expensive to everyones wallet and that includes Icelanders. In the petrol stations there are cafes and you can get an extremely fulfilling burger and chips for £8 or so, with the works. Also you have pilsur or hotdogs which are a cheap easy snack. In Reykavik they go mad for one particular seller down in the town centre- couldn't honestly say i tasted any difference. Also some resturants have the meal of the day which can be quite reasonable. As shops go- dont go in mate you will not like the prices. I had 3 weeks there and took a lot of dehydrated meals with me. Apparently there is a monetary limit on how much food you can take in with you, but i had no hassle. There will be times (surely) when you will want to try the local specialities. Do yourself a favour and don't convert the price back to Sterling. Just pay up and enjoy it.
Try and get into the interior, either Sprengisandur or Kolur, or indeed both. I think you may be a bit early for Sprengisandur,but like all travel in Iceland, it is weather permitting. I had a week of absolute blazing sunshine and so got all the properish offroading done then. The veiws in the interior were spectacular, and i could see horizon to horizon.
Road works!!!!!!! These can happen anywhere and without warning. I came steaming around a bend and over a crest to find 10" of hard core lying on the road waiting to be rollered in- no signage nothing.
For me there seems to be a bit of a struggle at the present. The island has to decide if they want to be a geothermal powerhouse and fully exploit that. Or derive monies from tourism which- if they lowered the prices a touch- would massively expand in my opinion.
It is a fantastic place though, and the Icelanders are total party animals!!
HENRY