We were notified by the Grindavik Guesthouse 1 day prior to our arrival that the town of Grindavik was closed due to volcanic activity. Even though the town was closed, the Grindavik Guesthouse refused to refund payment.
Very convenient location, great hosts. Close to blue lagoon and airport. It is guesthouse style tho--so you are sharing bathrooms with everyone. As long as you are good with that, it's a great place.