Hi Rubes, we didn't drive ourselves when we were over there but all the cars have studded snow tyres on and it's not like it is over here with cars struggling to get up hills and sliding about, although it can be a bit daunting at times doing 60 mph in a mini bus, in the snow, in rush hour traffic!
We saw the northern lights but I have to say that was probably my least favourite trip. You definitely must go to Gullfoss falls (south of the island) that is amazing, and while you are over that way see you can also go to watch the geysers going off from 10 feet away!!! This was our favourite trip we went on and really shouldn't be missed, the scenery is unbelievable. Google 'Golden Circle' this 300km route takes in both these sites and much more and besides and you could drive that yourselves if you don't want to go on a tour.
We also went to the blue lagoon which is really good, but does get busy.
We will go back (in fact we were talking about going over Xmas this year) and do the glacier trip where you drive into the glaciers in a pick up truck with huge tyres (looks like a monster truck thing), that looks fantastic.
Iceland is amazing (although expensive) and you will love it, Monkey has been as he has friends that live over there and I know he loves it too.
If you want to see any of our pics to get an idea of things pm me you email address and I'll send you some.