Graenn Kostur is nearly impossible to find if you just go by the address listed. The entrance is not on Skólavörðustígur, so you have to turn down Bergstadas and go behind Skólavörðustígur 10 (if it looks like you're walking into a parking lot, you're probably in the right place).
Once you find Graenn Kostur, it's a really nice little restaurant. The isn't much space, but the owners somehow managed to fit many tables inside. There are always a couple of specials available, which are displayed nicely on plates at the ordering counter. The decor is pretty hip and the restaurant appeared to be quite popular. The service is very fast and my server was very helpful - she even offered me a sample when I couldn't make up my mind!
I ended up eating a delicious sweet potato and chickpea stew, poured over brown rice, served with a tofu cake, homemade wheat-free bread and a side salad. The whole meal was very inexpensive - approximately 1400 ISK ($12.40 in USD) for my dinner and an organic ginger ale.
One caveat for vegans: Some of the dishes are made with soy cheese, and I think that the soy cheese may contain casein. I have no real basis for this claim, other than the fact that the soy cheese looked a little too stringy to be casein-free. That said, even if you choose to steer clear of the soy cheese dishes, there are still some others to choose from.