I have experienced both living in the capital area and countryside. Both of the locations have different ups and downs, but I think it depends also on your purpose of being in Iceland more than for your holiday.
Living in Reykjavik
One one side, the hardest park of living in the capital area it is actually to find a place to rent. I know it might sound very strange for some of you, but finding a place in Reykjavik can be almost impossible sometimes as the market cannot face the big amount of people that are living here nowadays. On the other side, living in Reykjavik brings you more work and social opportunities. You have more options in terms of jobs, more fields are bigger variety than outside of the cities. You can go out anytime and do shopping, walking or pretend that you are a tourist in your adoptive city. In Reykjavik there are a lot of events and festivals during the year, which will make your life maybe a little bit more interesting in social and cultural terms. The nicest thing about living in the capital of Iceland is that you have the freedoom to do more or less whatever you want and have different personalities around you!..and food :)
Living out of the city
Countryside of Iceland can be a very nice option for you if you want to save a lot of money or to spend a small period of time there. It is absolutely nice to be in the nature all the time and have all the nature for yourself, but if you are working and living in the same place for a long time, you will feel a little pressure on you. The good part is that you do not need to worry about food or home because usually this comes with the job (if you work in toursim for example). You will pay a certain amount of money and just show up for food, which is nice in a way, but you will not have so much choice. I consider that the worst part about living in the countryside of Iceland for a long time is that you have all the freedoom, but you cannot actually do much if you do not own a car or have good weather (or maybe not very extreme bad one) so you can walk around, explore and take pictures. Regarding your every day life, things will focus more on work and how easily the weather is changing and of couse, you will miss some regular things that you would do in a village or a town (shopping, having a coffe in a nice place, eat at a restaurant)
All the things in life come with a good side and with a bad side, but you always need to think twice if you really want to leave the city life behind and the most important thing is for how long you want to be in this process.