Iceland's cool, oceanic climate is quite mild for it's latitude, thanks to the warm Gulf stream. The summers are short and the best time to visit is late May to early September. The average daytime temperature around the coast during May to September is 10-12°C (50-55°F). Average daily sunshine in July and August is 5-6 hours and during the summer months the nights are bright, on clear days you have 24 hours of daylight and even the midnight sun near the Arctic Circle.
However, the weather is extremely changeable and unpredictable so you should always be prepared for the unexpected. You can encounter strong sudden winds and even snow in the middle of summer, so you should always follow the weather forecast.
You can get the weather forecast by telephone: 902-0600 or just by asking the locals, Icelanders follow the weather forecast almost religiously. At altitudes in the interior highlands the temperatures are of course lower. Check out the weather forecast at the Icelandic Meteorological Office or here
The dominant wind directions in Iceland are from easterly directions, E, NE-SE, and reflect the passage of cyclones on paths just south of Iceland. Westerly and north-westerly winds are infrequent. More information on this map: Climate in Iceland
Frequency of wind directions on Iceland, data from 1930-1960. Image source: Einarsson (1976)