I spent 2 weeks there doing the ring road. Everyone we met spoke perfect English. I mean absolutely perfect. We were talking to our server at a restaurant in a tiny village in the north and asked him if he had ever been to the USA since his accent was a perfect standard USA accent. He said he'd never even left his village to visit Reykjavik!
I visited a couple of months ago, and if you're an English speaker then there is little in the way of a language barrier. I don't think I met a single Icelandic person who didn't speak English while I was there.
Flights are dirt cheap. Accommodation and food is unusually expensive though, we found - even the tenting/campervaning is nowadays quite pricey.
Language was a non-issue for us. English proficiency was high. For those who don't speak English, if you're friendly enough, you can point to what you need, plus there's so many electronic aids these days if push comes to shove, it's not an issue. Perhaps more importantly, cultural norms will be familiar to Westerners, which makes it easier.
Zero barrier. Everybody speaks English, though contrary to other replies _locals_ tend to speak with a distinct accent. There are also lots of foreigners employed in the hospitality industry - Spaniards, Hungarians, Lithuanians and others - their English is markedly better.
Oh, edit - as others said, things are really quite expensive there, including food and drinks. Research before going. A breakfast of bread, butter, jam, a sausage and two sunny-side-ups can easily be 30 USD. A pint is 8-12 USD. A lunch of an unlimited soup and bread - 15-20 USD.
Not a problem for English speakers - Iceland English fluency is on par with other western/northern European cities. In the city, accents are generally mild.
From the east coast of the US, it's an easy flight. Often cheap too. Or, do a stop-over on your way to/from Europe
/UK.
For an English speaker, there's no problem. We visited about 10 years ago and the one person not speaking any English was an old lady keeping a convenience store somewhere in the north-western corner of the island.
