Coming from a nation of 300.000 people has its downsides, like lack of keyboard support on various platforms. So, when I got my awesome Nokia N9, I wasn't all that surprised that there was no text input option for "Íslenska" or Icelandic. Fortunately, The Nokia N9 is mostly open source and the on screen keyboard uses Maliit. For those who like custom keyboards, they can check out MesInput.
I have created a virtual keyboard file for Icelandic and contributed it to the MesInput project (awaiting confirmation).
Until then, you can download the file from here:
Then place it into:
The file can be uploaded through the SDK (sftp/ssh) or through USB mass storage (untested).
Edit: Óli mentioned that Hátækni made a similar VKB file. It can be downloaded as a .deb file from their site. I've looked through the file and the main difference is that they do not provide all of the accented characters, common to Nordic languages. In any case, it's all good.