After Reykjavik

I've been looking at options for the last three nights of my vacation.  I'm thinking staying in one of the towns about 2-3 hours east of Reykjavik for all three nights and using that as a base for exploration of southern Iceland.

South Iceland seems just glorious from all the photos and descriptions I've read.  There's coastline, waterfalls, glaciers, geysers, volcanoes (including Eyjafjallajokull, fresh off last year's eruptions), so I'm sure I'll have plenty to see.  I'm figuring on staying in or near Vik.