I'm using most of the time a Garmin Vista HCx to map. Sometimes when I'm driving around by car I use a Navibe USB-GPS and OziExplorer in WinXP with some geotagged maps to find my way around. For tagging and editing I use JOSM, sometimes Potlatch.
I did some work around Hallormsstaður and Egilsstaðir in summer 2008, after that I was doing some mapping around Reykjavík. Now I'm located in Neskaupstaður and trying to improve the eastern part of Iceland.