We will assume that you only need data since EU ruling on roaming charges make calls from overseas much cheaper, and getting a new number just for your holiday is unpractical. You can get prepaid data at various places around Iceland, the first stop is Elko in the Duty-Free store, or at the 10/11 convenience store after you clear customs at the Airport.
In Reykjavík, you can buy these prepaid data cards all over the place, gas stations, convenience stores, tourist shops and booking agencies.
Which one should I get?
There are three big carrier companies in Iceland; Síminn, Vodafone, and Nova. Síminn was usually considered above the other two, but the gap has tightened rapidly, and all three have acceptable signal throughout Iceland.