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I've been there six times. I loved visiting, Blue Lagoon is very cool. But as a place to live, couldn't do it. Would get rock crazy and outside of Reykjavik there is nothing. Summer is in the 60's. It doesn't get as much snow as you would think (less than NYC), but is still plenty cold in the winter with little daylight. I believe alcoholism is high there. But high standard of living, which is easy to do when the population is 250,000 and educated.
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The weather is indeed an issue. And in any place with a small population you run out of things to do. Which explains the drinking, I guess! As I said, I'd prefer to live here, but I can also see why the people living there aren't exactly fighting to get out. Plus, as guy how could you do better? Iceland chicks versus fat American chicks? Forget it.