There seems to be a lot of questions concerning Iceland Air service. I recently travelled with them. Here is what I found.
The airplanes are all 757's and seem very well maintained. Their fares are usually cheaper than other airlines but they are literally the Spirit Airlines of International travel. You will pay extra for everything except a coffee, tea, or water once a flight. The boarding system is chaotic. Bring an old pair of earphones to plug in to the seat entertainment system or pay for wifi. You can upgrade, but for the price, just buy a ticket on Virgin or British or Delta etc... You will get far better service. And yes - they arbitrarily have people put their carry-ons in the size checking box so make sure to have the correct size carry-on that they demand.
Lastly, they seem to select customers at their discretion to have special passport and security checks. Evidently it will show on your boarding pass as the letter s four times in front of your name. They do this in Keflavik. If you have the S's, Get Ready. You're in for multiple stops through the passport control and boarding process, including completely emptying your bags and stripping down any extra layers of clothing. You will also receive extra scrutiny and some attitude throughout your flight by the cabin crew. A seatmate from India as well as a black man in front of me both got the treatment.