Edited 06/02/11 Forgot some pretty basic details, thanks catsholiday
We stayed in this hotel fairly recently and had a really nice time, although we weren't in the hotel that much as we spent the break doing lots of different activities. The best thing about this hotel was it's location. Reykjavik is a small city by UK standards and we were able to walk from one edge of the city to the other but it was quite a trek. This hotel was located close to the main shopping area and the main square with lots of bars and dining opportunities. It was also located close to the sea and was near the main bus depot as well. This proved to be very useful as all the activities such as the northern lights tour and the golden circle tour started from the bus depot. The staff at the hotel will also help you book any activities that you choose to do and they will also arrange for the bus to collect you for departure straight from the hotel.
The hotel room was basic but clean and tidy, we had a self catering area with a fridge, microwave, kettle and sink. This proved to be very useful as we discovered that Iceland was a very expensive country to eat and drink so we were able to prepare some cheap snacks and drinks to try and keep the cost down. The hotel was relatively cheap compared to other's in the city and we were not expecting too much but were pleasantly surprised by the quality compared to cost. The bathroom was clean but again pretty basic, you had a shower, a toilet and a basin with a mirror above. You also had a hairdryer which as very useful as it was too cold to be going out with damp hair. No extras like shampoo at all. Due to how the water works in Iceland you had a very strong sulphur smell when you showered, this due to all the hot water coming directly from underground springs. Great for the people of Iceland as they pay no heating bills at all, water is plumbed straight into radiators and water tanks from the earth below
The hotel also provided a self service buffet style breakfast which we took advantage of to fill up before our days activity. It was pretty standard, but contained the usual basics of toast, cereal and some scandinavian favourites such as pickled gherkins and cheese. The breakfast was enjoyable, the place was clean and everything cooked well but it was not an exciting prospect. Breakfast was included in the cost of the hotel so this was a bonus.
The hotel also had free internet access from some shared computers which proved to be very useful as we had lost the details of one of the trips we had booked. But aside from that it was very basic. A public hot spot was very close to the hotel, a hot spot is a bit like a cross between a pool and a hot tub but it is fuelled with natural hot underground spring water and they smell very strongly of sulphur. A must if you want the Iceland experience and don't want to travel far to visit places like the blue lagoon.
Other points of interest
There is an excellent bus service that operates all around Iceland, we bought a return ticket from the airport and they actually dropped us off and picked us up from our hotel. The cost was 3500 Icelandic Kroner which is roughly £18 but this was well worth the cost as the journey is the best part of an hour each way. You can also combine this journey with a visit to the blue lagoon. We did this and thoroughly enjoyed it. The blue lagoon is a huge natural series of hot spring pools, they are lovely and relaxing. There are waterfalls dotted around the edge and cool areas as well as very hot areas with suitable warnings! There are saunas you can use and even vats of mud from the bottom which you can put on your face and body to create mudpacks. You could also have individual body treatments but we did not do these as they were quite expensive.
On our trip, we saw the northern lights every night and ironically the worst night was when we went on the special northern lights trip but that is just the luck of the draw I guess. We went snowmobiling, ice climbing and went pony treking among the volcanic ash fields. For more details of these trips you can google reykjavic excursions (not sure if i can put a link).
So in conclusion if you are looking for a budget break in a central location look no further than Hotel Fron.