We loved Icelandair, but mostly because we paid for economy plus, and I'm very very glad we did.
The seats in coach are narrow and quite hard... I don't know where they get their seats from, but they do seem harder and less comfortable than coach seats on other airlines.
Using economy plus, often times the coach economy plus seats (where you have three normal coach seats for two people, but with the middle seat unoccupied and a tray over it... very little more legroom than coach, though) are filled, so you get automatically upgraded to Saga class (basically business class). We only flew "normal" economy plus for one leg (from Iceland back to Seattle), and it was a little cramped due to the legroom and the narrow seats. But your chances of being upgraded are high, and MAN those are nice Saga class seats! Economy plus also offers free food and drinks (alcoholic and non). The only difference is that you don't get free champagne.
Also, it cannot be understated the joy of the Icelandair lounge at Keflavik, which you use for free if you pay for economy plus. Free food, coffee, drinks (alcoholic and non), huge comfy couches and seats, etc. Lovely.