I stayed here in Sept. 2007 and just turned up to book a single room for a couple of nights. The first price the receptionist gave me was a bit high so I haggled and got it reduced by a third. The room was perfectly adequate with an excellent hot and powerful shower - smelling of hydrogen sulphide (but you get used to that in Iceland).
Breakfast was the usual extensive cold buffet and was fine for my tastes. They have hot tubs outside and several comfortable lounges scattered about the corridors. It is quite large having previously been a boarding school. The corridors are filled with Icelandic Saga pictures and stories which creates a nice ambience.
The Snorri Sturluson museum is just outside and there is a petrol station/shop/cafe just down the road - but not much else at Reykholt. The waterfalls Hraunfossar and Barnafoss are not far and don't miss the Deildatunguhver hot springs to the west which are amazing.
If I was in the area again I'd definitely stop here. Nothing fancy, just comfortable and a nice atmosphere.