When I went Iceland had a closed currency. I changed some money in the hotel but mainly used my post office credit card so infant left with cash.
Alcohol was expensive-if I remember right the bottle of wine I bought (for a few us to share) was more expensive than my meal! We often had lunch at the hotel which was expensive-I think about £10-15 for a sandwich and chips type of thing. The evening meals we had were very nice, but I can't remember how much they were, but more expensive than here. I would suggest you just change a small amount of money and go back for more from the hotel as you need it. Sorry I can't help more!
On New Years eve, once I'd put my extra layers on and boots, I didn't take them off! I was a little warm in the restaurant but it was perfect for outside on the balcony!